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  • Milan Vaishnav, CMT, MSTA

Expiry Day Likely To Witness Volatile Moves; Profit Taking Bouts From Higher Levels May Be Seen

The second last day of the expiry remained very volatile, but on expected lines as the NIFTY swung 100 points on either side to finally end the day on a negative note. The markets witnessed a better-than-expected start and at one point of time, it traded on a strong note. However, profit taking pressure took over the markets in the afternoon and NIFTY pared over 100-points from the high point of the day. The intraday trade also saw a volatile and speculative reaction to Prime Minister Narendra Modi’s talk as he addressed the nation. However, the bearish undertone persisted and the benchmark index NIFTY50 ended the day with a net loss of 38.20 points or 0.33%.

The expiry of the current derivative series is expected to happen on a volatile note. A flat to mildly negative start to the day is likely and the session will witness activities dominated with the rollovers. In any case, the 11500-level is expected to pose any stiff resistance to upsides, if there are any.

Thursday will see the levels of 11500 and 11560 acting as stiff resistance points for the markets. Supports come in at 11400 and 11310.

The Relative Strength Index (RSI) on the daily chart is 65.4462; it continues to remain neutral and does not show any divergence against the price. The daily MACD, though it remains bullish as of today, is seen narrowing its trajectory. A black body emerged on candles; apart from this, no major formations were observed.

The pattern analysis now shows the markets consolidating again with the level of 11500-11575 acting as strong resistance points. After testing the 11572 following a breakout from a formation, the index has exhausted its strength and it is now seen consolidating with a corrective bias.

The volatility is almost certain to be seen in Thursday’s trade and much of this would be induced by rollovers. We continue recommending staying away from creating any major directional calls and continue to keep exposures at modest levels. Given the much wider than normal width of the Bollinger bands, the NIFTY is unlikely to give any runaway up-moves. All up-moves will continue to remain vulnerable to volatile profit taking bouts from higher levels.

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