Gemstone Equity Research & Advisory Services

Outlook For Thursday: Volatile Day Ahead For NIFTY; These Factors To Influence The Trade

In a yet another wide-ranging session on Wednesday, the NIFTY witnessed a volatile move wherein the markets oscillated in a 180-odd point range before ending the day with gains. The Indian equities saw a stable start to the day and while it stayed positive in the first half of the session, it also remained in a defined range. However, the afternoon time saw a sharp profit taking bout from the higher levels which took the NIFTY nearly 175-points off its high point. This decline stayed sharp and short-lived as the NIFTY spent the last two hours recovering from the low point. The headline index ended the day with a net gain of 95 points (+0.80%).

Markets will inherit overnight trade setup as the US Markets are bound to react to the messy US election outcome which is lined up. Regardless of the domestic technical setup, the opening of the markets will be influenced by the overnight trade setup. Also, we have Weekly Options expiry coming up; the levels of 12300 has the highest Call OI concentration followed by the 12000 levels. The volatility declined as the INDIAVIX came off by 4.29% to 23.2000.  The opening of the markets and the NIFTY’s behavior against the 12000-level will be crucial to watch.

Thursday is likely to see the levels of 11990 and 12045 acting as immediate resistance points. The supports will come in at 11830 and 11750 levels.

The RSI on the daily chart is 58.51; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and trades below the signal line. A white body emerged on the candles denoting the positive trend during the day.

The pattern analysis shows the NIFTY back inside the wide trading range that was formed. With the NIFTY back inside the 12000-11600 range, any sustainable up move shall happen only above 12000 levels are taken out convincingly.

With the 11600 levels getting protected twice after the markets bounced off the 50-DMA levels, the 50-DMA has now become an immediate important support for the markets. The 50-DMA is currently placed at 11570. However, while chasing the up move, it should be kept in mind that the NIFTY is below the 12000 levels; any up move shall happen only after this level is taken out convincingly. Until this happens, from the technical perspective, the NIFTY is inside the broad trading range. 

We reiterate the need to say stock-specific and continue avoiding high leveraged exposure along with guarding profits at higher levels.

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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