The markets started off on the penultimate day of the monthly expiry very much on the expected lines by entending its up move. The NIFTY opened on a modestly positive note and it kept making gradual highs during the day while trading in a limited range. At one point in time, the NIFTY found itself stable and extended its previous day’s up move. However, the second half of the day saw some serious selling pressure getting exerted on the markets again. The sharp paring of gains not only took the markets in the negative territory, but the NIFTY lost nearly 240-odd points from the high point of the day. Following a recovery towards the end, the NIFTY ended with a net loss of 88.30 points (-0.50%).
We enter the expiry day of the monthly derivative series. The strikes of 17500 and 17600 saw a lot of Call writing taking place; the level of 17500 holds maximum Call OI concentration followed by the level of 17600. This shows that the markets may find resistance in this zone on the expiry day. From the broader technical perspective, it would be crucial for the markets to defend their most immediate low of 17216; it would also be immensely important for the markets to crawl back above the 17450-17500 levels as the earliest. Unless this does not happen, we are again staring at some possibility of prolonged consolidation.
Thursday will see the levels of 17435 and 17500 acting as resistance points. The supports come in at 17310 and 17230.
The Relative Strength Index (RSI) on the daily chart is 36.79; it shows a mild bullish divergence against the price. The daily MACD stays bearish and below the signal line. No major formations were noticed on the charts.
Thursday being the expiry day of the current monthly derivative series, the session is bound to witness rollover-centric activities. Apart from this, we also saw Banks relatively outperforming the broader markets as well as the NIFTY. It is likely that Banknifty continues with its relative outperformance against the frontline NIFTY as well as the broader markets. It is also likely that select pockets of PSE stocks, Auto, and Oil & Gas universe also show relative outperformance and stay resilient. It is recommended that overall exposures must be kept at moderate levels unless the NIFTY moves and stays above 17500 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)
