Markets continued with its up move and reported yet another closing high as the benchmark index NIFTY50 ended the day gaining 20.70 points or 0.18%. The NIFTY has continued with its unabated up move but off late the range is getting narrower. Thursday’s trade also saw the NIFTY trading in a narrow 25-point range all throughout the session. The volumes too have been either lower-than-average or heavily stock specific in nature.
Friday is likely to see a subdued start to the trade. In event of any uptick that may be seen in the initial trade, there are probabilities of the NIFTY facing retracement from higher levels.
Friday is likely to continue to see the levels of 11495 and 11530 acting as immediate resistance levels for the Markets. Supports come in lower at 11410 and 11330 zones.
The Relative Strength Index – RSI on the Daily Chart is 74.4825 and it continues to trade in overbought territory. It also continues to show Bearish Divergence against the price as while the NIFTY marked a fresh 14-period high, NIFTY did not do so. Apart from a black body that emerged on Candles, no major formations are seen.
Pattern analysis show the NIFTY continuing its up-move post breaking above the 11170-11175 zones. Presently it trades overbought and stares at some imminent consolidation from higher levels.
Overall, despite the buoyant structure and the unabated up moves, if we speak of immediate short-term horizon, some retracement from higher levels is overdue. Given the overbought nature on the Charts, NIFTY is staring at imminent retracement from higher levels with each up move. It is also important to note that though downsides, if any, may not be much but volatility tend to increase during such corrective bouts that result into broader consolidation. We recommend staying away from aggressive purchases and refrain from chasing the momentum blindly. We recommend taking the Markets very cautiously and continue to maintain highly stock specific approach for the day.
STOCKS TO WATCH:
Stocks like Kaveri Seeds, Jay Bharat Maruti, National Aluminum, SAIL, DLF, Idea, Power Grid, JSW Steel, NCC, Ashok Leyland, Vedanta and Graphite India have relatively better technical setups.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst