It was a day of a range-bound movement and consolidation for the equity markets as the NIFTY stayed in the defined range and ended the day with a minor loss. The NIFTY saw a quiet start to the day; it soon got stronger and went on to mark the high point of the day in the first hour of the trade. Gradually, the index pared its morning gains to trade flat around its previous close levels. Thereafter, for the rest of the session, NIFTY headed nowhere and spent the time in the sideways trajectory. The markets did see some sharp moves on the downside, however, the final settlement of the index saw the benchmark ending the day with a minor loss of 19.65 points (-0.11%).
We approach the weekly options expiry; apart from that, we also approach the current month derivative expiry. The weekly options show some clear behavior of the market participants. Wednesday saw heavy Call writing of over 3 million shares at 17300 strikes. This means that for any meaningful extension of up move to happen, moving past 17300 will be very important. Not only this, this level is likely to offer strong resistance to the NIFTY on the monthly expiry day. On the lower side, maximum Put OI is seen at 17000 levels. This means that the markets may stay largely in a broad trading range on the expiry day.
A tepid start is expected on Thursday. NIFTY is expected to see stiff resistance at 17300 and 17345 levels. The supports come in at 17150 and 17065 levels.
The Relative Strength Index (RSI) is 49.27; it remains neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line. A spinning top occurred on the candles. This kind of candle denotes the indecisive behavior of the market participants.
Apart from some minor intraday spikes, the NIFTY did not show any directional bias throughout the day; the markets may continue to stay in a broad range on Thursday. The session is likely to stay dominated by rollover-centric activities. It is also likely that the markets may continue to stay highly stock-specific in nature and we will not see any specific sector dominating the session. However, in any case, it is recommended to keep exposures at modest levels and limited to low beta and defensive stocks. A cautiously positive approach is advised for the day.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
