Headline index Nifty had a stronger opening and made its intraday high point in the first hour of the day. However, Nifty was not able to maintain above 14,500 for long and started to steadily pare its early morning gain. Though not even at one point in time did the market show any major weakness, but the index kept paring its gain. While the index came off quite a bit from its highs following a minor pullback, Nifty finally ended with a net gain of 143.65 points or 1.00 per cent.
ET CONTRIBUTORSThe index stayed within a falling channel created following the formation of the high point at 15,431. It has been under a very gradual corrective decline. Nifty has bounced back above its 100-DMA again at 14,390.
With Nifty again between its 50-DMA (14,812) and 100-DMA (14,390), this level continues to stay as an important support point to watch on a closing basis. Volatility increased on the expected lines as India VIX rose 3.55 per cent to 23.4950.
From the current technical setup, Nifty is again between a trading zone of 14,800-14,400 while being inside the falling channel. Tuesday’s session is likely to see the levels of 14,550 and 14,625 acting as resistance points while support would come in at 14,390 and 14,310 levels.
The Relative Strength Index (RSI) on the daily chart stood neutral at 46.82 and did not show any divergence against price. The daily MACD was bearish and remained below its Signal Line. A shooting star emerged on candles. This demonstrates weakness as it implies that the market opened with a gap, edged higher, but could not sustain its higher levels and came off its highs before closing. This may have bearish implications but given that this formation has occurred within a channel, it may not cause much damage on the charts.
Despite the gaps in the opening on the either side, the market is in a wide range within the falling channel. Given the range of the channel, movements on the either side are wider than usual. However, the index has not taken any directional cues and continues to remain inside the falling channel with nearest resistance being its 50-DMA and nearest support being the 100-DMA.
The texture of the market is likely to stay stock specific in nature. We will not see any sector dominance in the market performance over the coming days. However, the performance will be more stock-specific regardless of the sector or the industry group it belongs to. We reiterate the need of approaching the market cautiously while protecting profits vigilantly.
(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)
