Friday To See A Muted Start; Corrective Undertone To Persist, Upsides May Remain Limited
In what was a trend-less day for the equities, the markets did not take any directional view and oscillated in a 40-point range for the entire session while ending with minor gains. After opening on a modestly positive note, the index traded in a sideways trajectory and kept moving on either side of its previous close levels by thin margins. However, it was the final hour and half of trade which saw some short covering in the markets. The NIFTY crawled back into the positive territory and finally ended the day with small gain of 12.40 points or 0.11%.
The recovery that was seen from lower levels on Thursday apparently came from short covering as the gain in the index was seen along with decline in Open Interest of NIFTY futures. Friday is likely to see a quiet start and we expect the markets to continue to exhibit bearish undertone. However, given the earnings of TCS and INFY coming up on the same day on Friday, some volatile moves in these stocks as well as within IT Index may be seen.
Friday will continue to see the levels of 11630 and 11675 working out as resistance points for the markets. Supports exist at 11550 and 11480 levels.
The Relative Strength Index (RSI) on the daily charts is 60.1165; it remains neutral and shows no divergence against the price. The daily MACD is bearish and trades below its signal line. No significant formations were observed on candles.
The pattern analysis on the daily charts show NIFTY under corrective retracement after marking a double top at 11760. Presently its rests at its short term 20-DMA which is 11548. Any breach of this levels might bring in some immediate weakness for the NIFTY.
As we approach Friday, we expect a range bound trade with some corrective bias. All up-moves, if there are any, will remain limited in scale. The would come more on short covering grounds and less on fresh long positions being built. We continue to reiterate adopting a cautious and stock specific view on the markets while avoiding aggressive purchases.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA / CSTA, Canada / STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)