Despite staying in overbought territory, the NIFTY continued to inch higher as it closed at a new lifetime high. The markets saw a much better-than-expected start to the day as it opened higher and on a much resilient note compared to the peers. However, it formed the intraday high in the early minutes of the session and pared some portion of its opening gains. The index then spent the entire session in a sideways trajectory as it oscillated in a 30-points range throughout the day. While not taking any directional call at any point in time, the headline index closed with marginal gains of 54.20 points (+0.31%).
The markets are now showing some signs of weariness at current levels. The strikes of 17400 saw the highest amount of Call and Put writing happening at the same level; this point also continues to hold the highest Call OI at present. This means that there are all possibilities of the NIFTY consolidating around these levels, in the process, making the markets all the more stock-specific in nature. Any fresh up-move shall occur only above 17500 points as the zone of 17400-17500 levels has become a potentially strong resistance zone.
Volatility continued to edge higher; INDIAVIX rose by 3.87% to 15.1050. Tuesday is likely to see the levels of 17400 and 17485 acting as resistance points; the supports are likely to come in at 17330 and 17240 levels.
The Relative Strength Index (RSI) on the daily chart is 83.39; it stays in the overbought territory. RSI is neutral and does not show any divergence against the price. The daily MACD is bullish and above its signal line.
A Spinning Top occurred on the Candles. This results out of a small real body. This reflects little price action during the day and also shows a lack of directional
consensus among the market participants.
All in all, the markets have got increasingly stock-specific in nature. While there are no signs of any weakness yet on the charts, we recommend avoiding aggressive buying; the ongoing momentum may be chased very cautiously. Also, the present technical setup also mandates vigilant protection of profits at higher levels. While continuing to stay defensive and stock-specific in approach, 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)
