Although it continued to maintain its gains, the index oscillated in a narrow 50-point range throughout the day. In the end, the headline index closed with a net gain of 128.05 points (+0.79 per cent).
Nifty has piled up gains of over 350 points in two days following a strong breakout. Also, we have expiry of weekly options lined up. This is likely to influence the market moves. While the breakout remains very much valid and continues, the Options data is throwing up mixed signals. A near-similar Call OI was seen at 16,300 and 16,400 levels.
Nifty’s behaviour against the 16,300 level will decide and dominate Thursday’s trend. Nifty shows heavy Put writing between 16,000 and 16,200; this indicates that there are little chances of the market showing any corrective intent.
Volatility declined again; INDIA VIX came off 3.89 per cent to 13.2125. Thursday’s session is likely to see the 16,300 and 16,365 levels act as resistance points. Supports will come in at 16,200 and 16,120 levels.
The Relative Strength Index (RSI) on the daily chart stood at 69.49; it has marked a new 14-period high, which is bullish. RSI, however, does not show any divergence against the price. The daily MACD is bullish and trades above the signal line.
ETMarkets.comA rising window occurred on the candles. This results essentially out of a gap and usually gets resolved in the direction of the trend. All in all, Wednesday’s bounce had two characteristics.
Firstly, almost the entire bounce was driven by financials. Secondly, the broader market saw some corrective activity. This keeps Thursday’s analysis limited. We recommend avoiding shorts, but at the same time, suggest keeping fresh purchases limited to the defensive largecaps. While continuing to guard 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 EquityResearch.asia and ChartWizard.ae and is based at Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
