Nifty: Trade Setup: Nifty may remain rangebound in Muhurat session; 17,900 key resistance

Caution weighed heavy on the market ahead of a long weekend, as well as, the FOMC outcome as the index ended the day on a sluggish note.

The market saw a stable and positive start to the day. Nifty50 opened higher and inched closer to the 18,000 levels once again. However, it gradually gave up its gains to slip into the negative zone. There was some recovery in the afternoon session, which saw the index recouping its losses to trade flat but this recovery was not sustainable, and the Nifty50 went on to end the day with a net loss of 60 points.

Thursday has a token and symbolic one-hour Mahurat Session.

Wednesday was also the day for weekly options expiry. Given the highest Call OI at 18,000, Nifty was not able to get past this point. Importantly, we will have the Federal Reserve’s outcome later tonight and the market will react to that in Thursday’s session.

Assuming there are no negative reactions to deal with, the market is likely to see a rangebound session, with limited downsides. As per the options data, there are low chances of Nifty slipping below the 17,800 levels. Thursday will see the levels of 17,900 and 17,945 acting as resistance points. The supports come in at 17,800 and 17,730 levels.

The Relative Strength Index (RSI) on the daily chart is neutral at 51.05. It does not show any divergence against the price. Meanwhile, the daily MACD is bearish and trades below the signal line.

On the daily charts, a candle with a long lower shadow has emerged. It has occurred near the pattern support area. The emergence of such a candle near the support may act as a reversal point for the markets. However, this will require confirmation on the next trading day. The volumes will obviously remain less as this will be a short session. Such sessions just invite token and symbolic participation from the market participants. Unless there are any major negative points to deal with, the markets usually trade with a bullish undertone.

We recommend avoiding any major positions unless the market starts digesting the Fed’s outcome from Monday onwards. We also suggest continuing to stay stock-specific in your investment approach and avoiding shorts. Trades can use downsides to make highly selective purchases.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)