The markets had a very orchestrated session on Tuesday as it ended with a modest gap up and spent the entire session moving in the sideways trajectory. The NIFTY opened on a positive note and stayed positive throughout the day. Following a strong start, the NIFTY made a change in the directional move on either side. It did not get stronger much, and also it did not show any corrective move. The entire session saw the Index moving in a narrow 40-point band. The headline index finally ended the day with a net gain of 112.15 points (+0.71%).
NIFTY is again approaching its crucial resistance zone of 15850-15900 levels. Monday’s action saw some Put OI addition at 15700 and 15800 levels. However, the strikes of 16000 still continue to remain that level on which a maximum amount of CALL OI concentration is seen. If the NIFTY is able to move past the 15900 levels, it may test the 16000-mark but also see a very stiff resistance there. This makes the up move, if any, from current levels limited. The opening of the markets and the intraday trajectory that it may form on Wednesday will be crucial. The behavior of the NIFTY against the price level of 15900 will be critically important to watch.
Volatility remained unchanged. INDIAVIX declined by a negligible 0.18% to 12.0675; this level stays one of the lowest levels seen in the recent past. Tuesday is likely to see the level of 15850 and 15935 acting as resistance points. Supports come in at 15740 and 15680 levels.
The Relative Strength Index (RSI) on the daily chart is 61.29; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and remains below its signal line.
A rising window occurred on the Candles. This is essentially a result of a gap up seen in the markets. However, it is important to note that this gap has occurred within an area pattern and the current formation just remains an “area gap”. Such gaps have little significance or implications.
All and all, the analysis for Tuesday stays on similar lines. The risk-on setup is evidently in place. Give the present technical setup, fresh purchases can aggressive only after the NIFTY moves past the 16000-levels convincingly. Until this happens, we recommend continuing to keep exposures under control and keep booking profits vigilantly at current and 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)
