Friday Likely To Witness Sluggish Trade; Upsides May Find Resistance At Higher Levels

Markets witnessed a lackluster session on Thursday as it made not major headway despite managing to keep its head above important levels. After a quiet start, the markets traded in a defined range for most past of the day. The afternoon trade did witness some up move, but those levels were not sustained, and the index drifted lower and slipped into negative territory. While it witnessed no major directional move, the NIFTY50 ended the flat with minor gains of 5.20 points or 0.05%.

In our previous note, we had expressed concerns about the markets lacking in market breadth and not showing enough conviction that it requires to make a major up move while sustaining it at higher levels. Such minor cracks continue to remain visible and we expect the markets to witness some more consolidation in a defined range before it makes any major headway on the higher side.

Friday’s session is likely to remain sluggish as well with the moves remaining capped on the upside. We expect the levels of 11090 and 10160 act as immediate resistance levels. Supports will come in at 11030 and 10910 levels.

The Relative Strength Index (RSI) on the daily chart is 63.8987. RSI has marked a fresh 14-period high while it does not show any divergence against the price. The daily MACD continues to trade above its signal line in a flattened trajectory.

A small black body emerged on candles. This formation cannot be defined as a spinning top, but it certainly conveys lack of conviction at higher levels and an indecisive state of mind of the participants.

All in all, unless corrected over next couple of days, minor signs of some impending weakness have started showing up at current levels. The present structure of the chart clearly suggest that NIFTY is finding it difficult to negotiate a level higher than its immediate past high. The volumes are lower than usual, and the market breadth continues to remain a concern. We suggest staying away from creating any heavy exposures and continue to protect profits at higher levels. A cautious view is advised for the day.

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