The Indian equity markets traded precisely on the expected lines. As mentioned in the previous note, the NIFTY not only just bounced back sharply, it also continued to stay in a range on the analyzed lines. The NIFTY saw a better and positive start to the day. After starting the day with gains, the NIFTY got only stronger as the session progressed. It marked the day’s high point in the late morning trade. The second half of the session saw the NIFTY paring some of its gains. It came off from the high point but spent the remainder of the session in a sideways trajectory. It managed to protect the bulk of its gains and finally ended the day with a net gain of 159.20 points (+0.91%).
The session remained important from the technical perspective. It has defended the lower edge of the consolidation at 17400. No, the broad range of 17950-17400 has got well defined on the chart as a consolidation zone. Amid this zone, 17800 levels are important to watch as they can offer resistance as per the Options data. The volatility continued to decline; INDIAVIX came off by 2.76% to 16.7350. For Tuesday and for the immediate short-term, observing NIFTY’s behavior vis-à-vis the levels of 17800 will be crucial to watch as it holds the second-highest accumulation of Call OI followed by 18000 levels.
Tuesday may see a stable start to the day. The levels of 17750 and 17800 will act as potential resistance points. The supports will come in at 17650 and 17580 levels.
The Relative Strength Index (RSI) on the daily chart is 63.80; it is neutral and does not show any divergence against the price. The daily MACD is bearish and trades below the signal line.
Morning Star Pattern is seen on the candles. However, before calling it a classical morning star, we need to understand that since it has emerged near the upper levels or the high point range, it may not be as potent as it should be. Also, it will have its limited potency given the fact that it has occurred during a broad consolidation and not following a decline.
All in all, the inherent strength in the markets remain intact. The level of 17400 has marked itself as an important support point for the markets. On the higher side; the zone of 17800-17950 is a crucial resistance zone for the markets to navigate going ahead. The markets have been showing sector-specific performances over the past few days. This will continue to persist and we will see specific sectors like Banks, Autos, Auto ancillary, Pharma, and select PSE stocks continuing to relatively outperform the broader markets. While keeping overall exposures at modest levels, a cautiously positive view 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)
