Trade Setup: Nifty faces strong resistance near 15,000-15,100; protect profits at higher level

The domestic equity market continued with its incremental move on the way up as it ended Friday’s session on a positive note.

Headline index Nifty opened positive and stayed positive throughout the session. The index marked its intraday high point in the early minutes of the morning trade. After that, it stayed very range bound and did not make any significant move on the either side. Nifty spent the day within a defined 75-point trading range; it finally ended the day with a net gain of 98.35 points or 0.67 per cent.

From a technical perspective, the market is showing a strong undercurrent. At the same time, the texture of the market stood highly defensive with metal being the only exception. It is also important to note that the index continued to remain in the falling channel. As long as it stays inside this falling channel, it will continue facing resistance at 15,000-15,100 zone and will make any meaningful move only above this zone. NIFTY PCR across all expiries inched higher to 1.33.

Volatility fell as India VIX declined by 5.50 per cent to 20.8225. Monday’s session may again have a stable start to the day. The levels of 14,900 and 14,965 will act as resistance points, while support will come in at 14,730 and 17,680 levels.

The Relative Strength Index (RSI) on the daily chart stood neutral at 54.85 and did not show any divergence against price. The daily MACD was bullish and above its Signal Line. A Spinning Top occurred on the charts. This shows the tentative behavior of market participants and also shows lack of convincing directional consensus.

All in all, over the past couple of sessions, the market has shown a buoyant undercurrent. However, at the same time, it is important to note that attempting to break out is one thing and actually breaking out is another. At present, the index is trying to approach the upper edge of the falling channel; however, it has not yet broken out of this pattern. We are seeing improvement of Relative Strength of sectors like FMCG, consumption, and IT against the broader market. Nifty faces a strong resistance near 15,000-15,100 zone and unless this zone is taken out convincingly, we reiterate to continue approaching the market on a highly defensive note and protect profits at each higher level. A cautious view 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)