In a thoroughly orchestrated session, the NIFTY suffered a gap down again on Wednesday and ended the day on a negative note. The markets opened negative but opened on a relatively resilient note. However, after managing to keep the losses capped, the NIFTY gave up in the afternoon to slip below the psychological mark of 17000. The second half of the session saw some recovery; the NIFTY rebounded over 100-odd points from the low point of the day. In the end, the headline index finally closed with a net loss of 162.40 points (-0.94%).
The markets are opening with a gap up or a gap down for several days; the behavior of the markets remain orchestrated and such behavior often tend to defy the technical principles in a short term. So, in such given circumstances, it becomes all the more important that we keep broader technical picture in mind and stick to the technically derived values. Taking this further, from a technical perspective, the levels of 200-DMA continue to act as a important resistance level to watch on a closing basis. The 200-DMA presently stands at 17212. Unless the NIFTY is able to crawl above this point, it will continue to stay vulnerable to selling pressures at higher level.
We also approach the monthly derivatives expiry on Thursday. The session will continue to remain highly influenced and governed by the rollover-centric activity. The previous session saw call writing happening at 17000 and 17100 levels; however, the highest call OI stands at 17500. It is also important to notice that the maximum Put OI stands at 17000 levels. This makes the price behavior of the NIFTY against the level of 17000 very important to watch.
Thursday is likely to see the levels of 17150 and 17240 acting as resistance points. The supports come in at 17000 and 16880 levels.
The RSI stands at 45.24; it is neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. A Doji emerged on the candles; its occurrence near pattern supports may indicate a reversal. However, confirmation for the same is essential and must be watched for.
All in all, the NIFTY remains in a broad trading range of 16850-17500 levels. As mentioned in the previous note, all the three key moving averages are within this zone in close proximity to each other. On Thursday, it would be essential and very important for the NIFTY to keep its head above 17000; if it is able to do this, then a technical pullback can again be expected. If the level of 17000 is violated, some incremental weakness cannot be ruled out. It would be prudent to approach the markets on a very cautious note while keeping overall exposures at modest 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)
