On a strong and trending day for the stock markets, the NIFTY attempted hard to break out of the congestion zone that it had formed for itself. It opened strong today, maintained its gains, and ended the day on a strong note. The markets saw a positive start to the day; after an initial blip, the NIFTY got stronger again and stayed strong throughout the day. The zone of 17350-17500 was acting as resistance; NIFTY stayed near 17500 for the majority of the time before it ended just a notch below that point. The headline index closed with a net gain of 172.95 points (+1.00%).
Markets will not only have the weekly options expiry on Thursday but also has monthly derivative expiry as well. The session will stay highly influenced by the rollover-centric activities; the level of 17500 will act as an inflection point for the markets. The previous session saw heavy Put writing on 17300 and 17400 levels; however, the levels of 17500 continue to see the accumulation of the highest Call OI. This means that if the NIFTY is able to move past and stay above 17500, it may see the up move getting comfortably extended. If it stays below 17500, it will also mean that the markets continue to consolidate again in the broader range.
The price action of NIFTY against the level of 17500 will be crucial to decide the trend for the day. The levels of 17555 and 17680 will act as potential resistance points; the supports will come in at 17410 and 17330 levels.
The daily RSI stands at 60; it has marked a new 14-period high which is bullish. The daily MACD stays above the signal line and remains bullish. A rising window emerged; it results out of a gap on the upside and generally resolves in the direction of the trend.
The pattern analysis shows that the NIFTY was trading inside the defined 17000-17500 range; on Wednesday, it has tried to break out of this consolidation zone and resume its up move. The index now trades above all the key moving averages.
Overall, even if the markets consolidate and stay below or around 17500, that would be only because of the expiry-influenced moves. Apart from this, looking at the technical setup, there are higher possibilities that the NIFTY extends the up move and inches higher. We recommend avoiding shorts. Any move on the lower side must be used to pick up good quality stocks while continuing to vigilantly protect profits at higher levels. A positive outlook 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)
