The equity markets prepared themselves to face the Union Budget on a stronger footing as they opened higher and ended the day with gains. The NIFTY opened with a gap-up and got stronger as the day progressed. The Index maintained its gains throughout the day while it stayed range-bound not showing any major oscillations. It came off a bit from its high point though, but the bulk of the gains was maintained. The participation remained broad-based on the expected lines and no particular sector dominance was noticed. The NIFTY finally ended with a net gain of 237.90 points (+1.39%).
The Finance Minister presented the Economic Survey today. It sounded optimistic and buoyant; it presented a growth estimate of 8 to 8.25%. It showed and projected strength in nearly all quarters of the economy. The markets are likely to have a much wider than usual trading range as it stands to face the Union Budget; this remains one of the most important domestic events for the markets. The trading trajectory is likely to be quite typical of what is seen on any Budget day. The markets are likely to open stable but stay in a defined range in the morning session. The markets will start to take directional bias only once the proposals start rolling in and starts getting digested.
The NIFTY will see the levels of 17450 and 17500 acting as potential resistance levels. The supports come in at 17180 and 17000 levels.
The Relative Strength Index (RSI) on the daily chart is 44.20; it is neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line. No major formations were seen on the candles.
The pattern analysis shows that while the NIFTY has defended the falling trend line support, it has resisted the 50-DMA while it bounced back. The 50-DMA stands at 17427.
Given the event of a Union Budget, there will be sharp oscillations in the markets as the proposals start getting digested; there will be moments when technical levels may get violated on either side. In broader terms, it is expected that PSEs, PSUs, Banks, Autos, and Infrastructure may see some larger moves. The broader markets will continue to perform better on relative terms. It is recommended to initiate major purchases/positions only after all proposals come in to avoid spikes in the moves. INDIAVIX rose 6.08% in the previous session and volatility is likely to remain present in the next session as well. A cautiously 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)
