Caution Advised For Monday; Exit Polls May Infuse Volatility & Technical Levels May Be Violated
Friday’s trade saw the NIFTY closing on a strong note after a spurt in the second half of the trade. After witnessing a positive start, the NIFTY maintained modest gains for the entire day and it only got stronger towards the end of the session. There was a sharp short covering along with fresh buying ahead of the Exit Polls that are scheduled to come on Sunday evening. While ending near the high point of the day, the headline index gained 150.05 points (+1.33%).
With the exit polls coming in on Sunday evening, the opening on Monday is bound to get affected. The exit polls can potentially cause a gap up or a gap down opening on Monday morning. Having said this, if we discount this most likely reaction, a stiff resistance exists at 11500 levels. As of Friday’s close, the strike price of 11500 has highest Call OI built up and under normal circumstances, this level is expected to act as resistance.
If we attempt to remove the elevated noise levels which are likely to be created by the exit poll outcome, the levels of 11500 and 11550 will act as resistance. The supports come in at 11330 and 11280.
The Relative Strength Index (RSI) on the daily chart is 48.2903; it remains neutral and shows no divergence against the price. The daily MACD stays bearish and trades below its signal line. A big white body emerged on candles. Apart from this, no major formations were seen on Candles.
It is important to note that despite attempting to paint a technical picture of the trade on Monday, there are very high chances that we see the session defying the technical levels on either side. The exit polls are certain to infuse volatility in the trade and we are very much likely to see the markets oscillating back and forth on either side. We recommend staying away from aggressive bets and continue adopting a high degree of caution while approaching the markets.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA / CSTA, Canada / STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)