Gemstone Equity Research & Advisory Services

Friday Trade Setup: NIFTY Stays Crucially Poised; Protect Profits Vigilantly

While staging a rally in the second half of the session, the markets recovered a good amount of what it had lost in the previous session. After opening on a quiet note, the NIFTY soon slipped in the red in the morning trade. After that, it slipped a bit more as it spent the first half of the session in a defined, but negative territory. It was once again the second half of the trade which saw the markets stage a late rally. The NIFTY, at one point in time, also went past the 13000 levels but retraced a bit to settle with a net gain of 128.60 points (+1.00%).

The session was highly dominated with weekly expiry of options and the monthly derivative expiry as well. The 13000 level saw the highest concentration of Cal OI throughout the day and this ensured the NIFTY settled below this level. On the same breadth, highest Put OI concentration at 12800 ensures NIFTY to move above this level. The NIFTY has ended at a crucial juncture and stays exactly in middle of the 12960-13000 resistance zone. The opening of the markets, and the behavior of the Index against the levels of 13000 will be crucial to watch in the next session.

The volatility dropped sharply as INDIAVIX declined by 13.42% to 20.0225. Friday is expected to see the levels of 13030 and 13120 to act as resistance point. The supports come in lower at 12910 and 12780.

The Relative Strength Index (RSI) on the daily chart is 68.35; it remains neutral and does not show any divergence against the price. The daily MACD is still bullish as it trades above the signal line. However, a sharply narrowing slope of Histogram stays a reason for some worry.

A candle with a long lower shadow occurred. This continues to indicate a likely stalling of the present rally if the markets do not move past the previous high point.

The lead indicator is marking lower tops and the classical bearish failure swing that happened yesterday stays very much in force. On the price front, there are possibilities of the NIFTY marking incremental moves on the higher side if it is able to move past the 13000 levels and stay above that. If it slips or stays below the 13000 levels, it remains vulnerable to profit taking bouts at current levels.

There will be an absence of any overnight cues from the US because of Thanksgiving holiday. We reiterate to stay stock-specific while having a tight vigil on protection of profits.

Milan Vaishnav, CMT, MSTA
Consulting Technical   Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK)  | (Research  Analyst, SEBI Reg. No. INH000003341)

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