Following a weaker than usual handover from the global trade setup, headline index Nifty opened on a negative note and then slipped further in morning trade. The index, however, managed to recover from its morning low point to trade flat again near its previous close. The second half of the trade saw a wave of profit taking gripping the market again, taking Nifty to a fresh intraday low. The index spent the last hour in a capped move and showed no major recovery. Nifty finally ended with a modest cut of 104.55 points or 0.68 per cent.
ET CONTRIBUTORSWe have the weekly options expiry coming up and the trend for the day will be heavily influenced by it. On Wednesday, the strikes of 15,300 had maximum Call writing followed by 15,200 level. Maximum Call OI stood at 15,300. This maximum Call OI concentration was initially at 15,500 at the beginning of this week and gradually shifted to 15,400 and now to 15,300 levels. This means that the index will face resistance with each incremental upside. The maximum Put OI, however, continued to stay at 15,000.
The market is expected to see a ranged movement between 15,300-15,000 levels, unless there is any tactical shift of OI on either side. Volatility cooled off a bit with India VIX coming off by 1.26 per cent to 21.5050. Thursday’s session will see the levels of 15,260 and 15,300 acting as resistance points, while support will come in at 15,130 and 15,040 levels.
The daily RSI was bearish at 66.92; it slipped below 70 from an overbought zone. The RSI was neutral and did not show any divergence against price. The daily MACD was bullish and remained above its Signal Line. A black body candle emerged on the charts. Apart from that, no other formation was noticed. Pattern analysis shows that Nifty attempted to move past the rising trend line drawn from 14,600. The index has moved past this level; however, any slip below 15,200 will take Nifty below this pattern resistance again.
Overall, the market is showing all possible signs of fatigue at current levels. There are certain pockets like select midcaps, PSU banks, and energy stocks seeing selective outperformance against the broader market, and this phenomenon is likely to continue for some time. We reiterate approaching the market with utmost caution and avoid chasing the high beta stocks that have run up too fast over the past quarter. The sectoral rotation is evident. Staying light while approaching the market on a highly selective and cautious note is advised for the day.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
