Headline index Nifty started on a flat note and after dipping slightly in the red in the morning trade, it crawled back inside the positive territory. The index spent most of the day trading in the positive territory but within a capped range. It was the last hour of the session again that led to undoing of the day’s gain. The index not only pared all its gain, but also dipped well into the negative zone. However, it managed to recover all the loss and finally closed flat with a negligible loss of 10 points or 0.07 per cent.
Nifty continued to hold maximum Call OI concentration at 15,200. Unless the index is able to move past this level and sustain above that point, it will stay vulnerable to profit taking bouts at higher levels. The F&O data did not offer any strong directional cues, but the longer timeframe charts stayed evidently overstretched and overextended. On the other hand, Nifty futures have seen addition of some Open Interest, indicating built up of some short positions. The Nifty PCR stood healthy at 1.38. Volatility declined as India VIX came off by 3.79 per cent to 23.0450.
Monday’s session is likely to see a steady start to the week. The levels of 15,200 and 15,295 will act as immediate resistance points, while support will come in at 15,100 and 15,020 levels.
While the upsides are expected to stay capped, any corrective move is likely to make the trading range wider than usual.
The daily RSI stood at 69.85; it stayed neutral and did not show any divergence against price. The daily MACD was bullish and stayed above its Signal Line. A Spinning Top candle occurred on the charts. This shows the tentative behavior of the market participants; occurrences of Spinning Tops near the peak following a steep uptrend may lead to a disruption of the current uptrend. However, this will need confirmation on the next bar on the charts.
All in all, the index is hanging precariously near its peak level. If the Nifty extends its up move, it will stay highly limited. Upsides will continue to stay capped with the market remaining vulnerable at higher levels. With the US Dollar likely to get resilient, stocks may see some traction over the coming days. We recommend continuing to stay highly stock-specific and approaching the market on a highly cautious note, while keeping exposures at modest levels.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at firstname.lastname@example.org)