The oversold Markets today witnessed a decent relief rally as we saw a secular upsurge and across the board pullback as all the sector Indices except IT ended with gains ranging from 1.5% to 5.5%. The benchmark Index NIFTY50 saw itself pulling back sharply and sustaining its gains until the end of the session. The Index ended the day gaining 159.05 points or 1.54%.
We step into Thursday’s trade and do so with optimism. There are greater chances that the Markets may continue with its pull back and we see gains being extended. In event of any consolidation, it would be critically important for the Markets to trad above 10400. The most interesting part of the pullback that was seen in Wednesday was that the pullback has not yet entirely come on back of short covering. It has seen buying from lower levels as well as the Open Interest was seen being added.
Thursday is likely to see the levels of 10495 and 10560 acting as immediate resistance area. Supports come in at 10400 and 10350 zones.
The RSI on the Daily Chart is 30.9745. Though it remains neutral showing no divergence against the price, it has just crossed above the oversold area which is bullish. Daily MACD is now seen flattening its trajectory. Apart from a white body that emerged on candles, no significant formations were observed.
Off late, the Markets had got deeply oversold and more so during the last couple of sessions and the pullback that we saw on Wednesday was in fact long overdue. It is a positive sign that the pullback has not come just on account of short covering. It has seen buying emerging from the lower level a s well and this is a positive factor. For Thursday and subsequently, we expect the Markets to continue its pullback and also consolidate in a broad range with positive bias. If Markets are to form a base in the current zone, some broad consolidation cannot be ruled out.
We recommend now to keep making select purchases in event of any consolidation. The levels of 10350-10400 would be crucial and NIFTY will have to trade above this to prevent weakness from creeping in again. While continuing a cautious approach, positive outlook is advised for the day.
STOCKS TO WATCH:
Long positions were seen being added in Ashok Leyland, NCC, Vedanta, Hindustan Zinc, Bajaj Finserv, Bajaj Finance, Axis Bank, State Bank of India, ICICI Bank, Bharti Airtel, National Aluminum, IOC and Kotak Bank.
Milan Vaishnav, CMT, MSTA, Consulting Technical
Member: (MTA, USA / CSTA, Canada / STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
Tel: +91-70164 32277 | |