The equity markets had a buoyant start to the week as they opened higher and ended the day on a strong note. The markets had a booster dose in the form of HDFC getting merged into HDFC Bank. This saw both stocks opening with a gap up and getting stronger during the day. At one point in time, out of over 400-points of gain in NIFTY, over 352-points were being contributed by these stocks. Some profit-taking was seen in the afternoon trade, but the markets picked up the pace again. The markets went close to their intraday high point; the NIFTY ended the day putting on gains of 382.95 points (+2.17%).
With Monday’s move, the NIFTY has gone convincingly above 17800; this was the first double top resistance for the markets. The taking out of this point has resulted in the NIFTY dragging its support point higher; this makes the level of 17800 a first pattern support in the event of any consolidation. The options data shows that the strikes of 18000 have seen the accumulation of the almost equal number of Call and Put OI; the highest Call OI stays at 18500 levels. This makes the level of 18000 an inflection point for the NIFTY. The markets may surge higher if the NIFTY is able to keep its head above 18000; any slip below this level will push the markets into some consolidation again.
Tuesday is likely to see the levels of 18100 and 18145 acting as potential resistance points. The supports come in at 18000 and 17880.
The daily RSI is 68.33; it has made a new 14-period high which is bullish. It continues to remain neutral and does not show any divergence against the price. The daily MACD stays bullish and trades above the signal line. A rising window occurred on candles. It results from a gap on the upside; usually, such formations tend to get resolved in the direction of the trend. However, this will need confirmation on the next trading day.
The opening of the markets and the trajectory that the NIFTY forms after the opening will be crucial to deciding the trend or the day. It would be absolutely necessary for the NIFTY to keep its head above the 18000-level if the up move has to extend itself. Any slip below the 18000 level will see the index getting pushed into consolidation again. It is highly recommended not to chase the high beta stocks and to stay highly stock-specific in approach. The defensive pockets like Pharma, IT, and FMCG may continue to see traction. Vigilant protection of profits is advised 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)
