Gemstone Equity Research & Advisory Services

Outlook For Friday: NIFTY Shall Continue To Inherit Overnight Trade Setup; Approach Markets In This Manner

Very much on the anticipated lines, the Indian markets inherited a very buoyant overnight trade setup. The markets opened on a large gap-up and stayed thoroughly strong throughout the session. While continuing to maintain a strong market breadth, the markets maintained gains across the board as it ended a yet another day on a strong note. Sectors across the board saw gains as the NIFTY continued posting incremental gains throughout the day. While showing no signs of any retracement, the index maintained its gains through the entire day. The NIFTY finally ended posting strong gains of 211.80 points (+1.78%).

Given the rally that we are seeing over the past couple of sessions is purely driven by US election-led moves. It would be rather useless or irrelevant to analyze the markets through just technical in a bullish way. The reason for this is that the technical setups or FO data may take a backseat when the markets “react” to any major external event. It is, however, a different point that technicals do take over on a broader note. In the yesterday’s session, despite weekly options expiry, the markets showed no volatility of any nature. In fact, the volatility saw a sharp fall as the INDIAVIX declined by 9.63% to 20.9650.

Friday may see the opening once again influenced heavily by overnight trade setup. However, given the FO data, the 12150 and 12250 have large Call Open Interest concentration and in the event of any up move, we can expect these two levels to act as resistance points. Supports exists at 12000 and 11950 levels.

The daily RSI is 64.91; it shows a bearish divergence against the price. While the price has marked a 14-period high, the RSI has not done so. The daily MACD has turned bullish and it now trades above the signal line.

A rising window occurred on the candles. This results out of a gap up, and usually such candles resolve into furtherance of the move. However, given the current technical setup, this will require confirmation on the next trading day.

As we go into the next session, momentum may be followed in its directional move. However, this being said, we reiterate that such momentum should be chased with utmost caution, and with each up move, profits should be protected. Without getting carried away or feeling left out, it would be prudent if we continue approach the markets with a sense of caution.

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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