Trade Setup: Nifty50 faces resistance at 15,850-15,935 levels

The market had a very orchestrated session on Tuesday as it ended with a modest gain and spent the entire session moving in the sideways trajectory. The Nifty50 index opened on a positive note and stayed positive throughout the day. Following a strong start, the Nifty50 index made change in the directional move on either side. It neither got stronger nor showed any corrective move. The entire session saw the index move in a narrow 40-point band. The headline index finally ended the day with a net gain of 112.15 points (0.71 per cent).

Nifty is again approaching its crucial resistance zone of 15,850-15,900 levels. Monday’s action saw some Put OI addition at 15,700 and 15,800 levels. However, the strike of 16,000 continues to be a level with the maximum amount of call OI concentration. If the Nifty50 is able to move past the 15,900 level, it may test the 16,000 mark, but also see a very stiff resistance there. This makes the bounce, if any, from current levels limited. The opening of the market and the intraday trajectory that it may form will be crucial. The behavior of the index against the price level of 15,900 will be critically important to watch.

Volatility remained unchanged. India VIX declined 0.18 per cent to 12.0675. This level stays one of the lowest seen in the recent past. Tuesday is likely to see the level of 15,850 and 15,935 act as resistance. Supports come in at 15,740 and 15,680 levels.

The Relative Strength Index (RSI) on the daily chart is at 61.29. It stays neutral and does not show any divergence against the price. The daily MACD is bearish and remains below its signal line.

A rising window occurred on the candles. This is essentially a result of a gap-up seen in the market. However, it is important to note that this gap has occurred within an area pattern and the current formation just remains an area gap. Such gaps have little

significance or implications.

All and all, the analysis for Tuesday stays on similar lines. The risk-on setup is evidently in place. Give the present technical setup, fresh purchases can aggressive only after the Nifty50 index moves past the 16,000 level convincingly. Until this happens, we recommend continuing to keep exposures under control and keep booking profits vigilantly at current and higher levels.


(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)