Trade setup: Nifty key resistance seen at 15,300 and 15,245 levels; stay highly stock-specific

After a strong short covering on the last trading day of the week, the Indian equities stepped into the new week on a much cautious note. The markets opened on a positive and resilient note, but spent the entire day in a capped and defined range.

Following a positive start, the markets failed to take any definite directional bias and oscillated back and forth in an 80-odd points range. While failing to establish any definite trade, it gave up most of its gains in the last hour of the trade. The benchmark index finally ended with a net gain of 22.40 points or 0.15 per cent.

As we are in the expiry week, there will be both weekly options as well as monthly derivatives expiry and rollovers tend to influence the markets. Having said this, it is important to note that though 15,500 continues to hold maximum Call OI, 15,300 saw over 1.4 million of fresh Open Interest getting added. This is likely to prove resistance during this week unless a tactical change happens. Volatility remained unchanged as the India VIX rose by a negligible 0.26 per cent to 19.1300. Nifty moving past 15,300 would be crucial for it to have a sustainable up move this week.

While a stable start to Tuesday is expected, the level of 15,245 and 15,300 will act as resistance points. The supports will come in at 15,150 and 15,030 levels.

The Relative Strength Index (RSI) on the daily chart is 60.83; it stays neutral and does not show any divergence against the price. The daily MACD is bullish and remains above the signal line. A spinning top occurred on the candles. This reflects an indecisive behavior of the market participants.
The pattern analysis shows that after the throwback, Nifty has attempted to resume its up move. So long as the Nifty stays above the 15,000 level, this breakout from the falling channel will remain valid and in force.

All in all, the analysis for Tuesday remains on the similar lines. With the breakout from the falling channel very much valid and in force, we recommend continuing to follow the momentum. However, in the same breadth, even if the Nifty continues with its up move and attempts to test higher levels, staying selective in the markets will be much rewarding in the immediate short term. We recommend keeping fresh purchases highly selective in nature and also keep guarding any substantial profits at higher levels. A cautiously positive outlook 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