Nifty saw a quiet start to the day. After trading with minor gains in the opening trade, the index slipped momentarily into the negative zone, as it marked the low point of the day. It soon crawled back inside the positive territory. The index kept on rising from there and stayed in a upward rising trajectory throughout the day. It also managed to move past the 17,600 level and stay above that. The benchmark index finally ended with a decent gain of 110.05 points, or 0.63 per cent.
The notable thing during the session was a very high amount of Put writing that was seen at 17,500 and 17,600 levels. This speak volumes with regard to the internal strength that the market is showing. The major highlight of the day of absolute outperformance of Bank Nifty. The index marked its lifetime high of 37,720; and while doing so it moved above its previous high point of 37,708 formed in February. It is also important to note that when Bank Nifty marked its prior high of 37,708 on February 16, 2021, Nifty had made a high of 15,431. While the Bank Nifty tested that level today, Nifty has already soared over 2200 points above its February 16 high.
Volatility increased; India VIX surged 4.97 per cent to 14.4125. Nifty may see a quiet start on Friday and the 17,650 and 17,700 levels may act as immediate resistance points. Supports should come in at 17,560 and 17,500 levels. The Relative Strength Index (RSI) on the daily chart stood at 85.60; it is in the overbought zone and remains neutral as it does not show any divergence against the price. The daily MACD is bullish and trades above the Signal Line.
ETMarkets.comA strong white candle appeared on the charts. It marked a follow-up bounce after the previous day’s gain by Nifty. All in all, the market shows tremendous internal strength; and at the same time, we cannot overlook the fact that it is a bit overextended on the charts.
Since there is no sign of any tiredness or exhaustion in the market as yet, shorts should be avoided. However, in the same breadth, chasing of up move must be done in a very cautious way. While staying highly stock specific as always, one should guard profits are at each incremental high level.
The focus is now likely to shift to select auto, bank and realty stocks while the overall market may remain highly stock-specific. 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)
