It was a greatly volatile day of the trade as the NIFTY oscillated in over 280-points on either side before ending the day with a modest loss. The markets opened on a negative note, grew weaker in the first hour of the trade to mark the low point of the day. However, the NIFTY witnessed over 280-point recovery from the morning low; it not only recouped all its losses but also went on to add gains after moving in the positive territory. It stayed in the positive trajectory but did not add much to the gains and also did not take any definite directional bias from there. The recovery was given up partially and the index finally closed with a net loss of 69.65 points (-0.40%).
We remain in the monthly derivative series expiry week; apart from this, the situation on the geopolitical front between Russia and Ukraine remains fluid and uncertain. This has taken a toll on the market sentiments. Apart from this, from the technical perspective, the NIFTY has a strong resistance area of 17500-17650 on the higher side. On the lower side, the NIFTY has tested a confluence area of two trend line supports as evident on the charts. This makes the level of 17200 a sort of inflection point for the markets. For the NIFTY to see a technical pullback, keeping its head above 17200 will be crucial; in other words, any slip below 17200 will see some incremental weakness creeping into the markets.
Tuesday is likely to see the levels of 17280 and 17335 acting as immediate resistance points; the supports come in at 17120 and 17030 levels.
The Relative Strength Index (RSI) on the daily chart is 45.25; it continues to remain neutral and does not show any divergence against the price. The daily MACD is bearish and stays below its signal line. A Doji emerged on the candles; subject to confirmation, it may lead to a potential reversal point for the markets.
Even if the levels of 17200 may act as an inflection point for the markets, the weekly options expiry data show maximum Call writing taking place at 17200 levels. The overall options data shows the maximum PUT OI at 17000 levels whereas the highest Call OI is seen at 17500 levels. This validates that the NIFTY’s price behavior against the 17200 levels will be crucial. Unless a directional bias is established, it is recommended to stay away from creating aggressive positions. It is reiterated that a cautious and selective approach be adopted 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)
