Much on the anticipated lines, the NIFTY extended its up move and ended the day on a positive note while piling up incremental gains. The markets saw a gap up opening; it remained in a narrow range throughout the day. While it stayed in a capped range, the index was able to maintain its gains. At no point in time, there was any kind of volatility or any corrective move in the session. The gains remained secular across sectors; the index ended the day with net gains of 203.15 points (+1.16%).
The behavior of the markets over the past several days. The markets are witnessing either a gap up or a gap down opening; the subsequent session is seeing a very narrow move of the index in a very defined range. Such behavior, which is often artificial, devoids a trader to capture any intraday moves and also tends to defy some technical levels as well. In the present case, the NIFTY has easily moved above the 50-, and the 100-DMA as if they never existed. In the current case, once again the index has halted exactly near the short-term 20-DMA which stands at 17766. Such structured behavior makes the markets prone to sudden profit-taking bouts and some consolidation; for the current trend to sustain, it would be crucial for NIFTY to move above 20-DMA and keep its head above that level.
Thursday is likely to see the levels 17850 and 17980 acting as resistance points. The supports come in at 17700 and 17580 levels.
The Relative Strength Index (RSI) on the daily chart is 54.74; it remains neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. A rising window emerged on the candles; this essentially results out of a gap up and resolves with a continuation of the uptrend.
Thursday will also see the expiry of the weekly options; the weekly options data suggest that there was significant Put writing done at 17600 and 17700 levels. On the other hand, the maximum Call OI has shifted higher to 18000. This means that the markets have opened up some significant room for themselves on the upside. Some consolidation cannot be ruled out, but there are greater possibilities that the NIFTY may inch higher towards 18000 levels. It is reiterated that no consolidation or minor corrective moves should be used for creating shorts; instead, they should be utilized to make selective purchases. However, as we go higher from the current levels, all upsides should also be used with a focus to capture and protect profits at higher levels.
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)
