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  • Milan Vaishnav, CMT, MSTA

Markets Fail To Stay Above 11760; Caution May Prevail Ahead Of Extended Weekend

In a stark contrast to the previous day’s trade, the markets succumbed to selling pressure in the last hour of the trade to end with losses. After opening on a flat note, the session remained much in a capped range as the index moved in a sideways trajectory. The markets made no major headway on either side and oscillated in a limited range. It was the last hour of the trade which saw sharp paring of gains and the NIFTY ended the expiry day of the April series losing 84.35 points (-0.72%).

The yesterday’s up move was solely driven by expiry related moves. There was a massive call writing done on two strike prices above the then prevailing 11575 levels because premium at those strikes offered attractive yield until today’s expiry which led to massive short covering. We had mentioned in our yesterday’s note that the investors and traders should not get carried away by such up-moves and the level of 11760 will continue to provide stiff resistance to the markets.

The technical factors took over the markets once again. It failed to sustain itself above 11760 and has avoided the breakout again. As we approach Friday, there are higher chances of the NIFTY testing its short-term support level of 11550. All upsides, if there are any, will remain capped.

Friday is expected to see a tepid start to the trade and the levels of 11690 and 11735 will act as immediate resistance levels. Supports come in at 11550 and 11480.

The Relative Strength Index (RSI) on the daily chart is 55.4185; it remains neutral against the price if viewed in the context of the last 14-day period. On the longer term, it continues to form lower tops if visually inspected. The daily MACD remain bearish as it trades below its signal line.

A large black body occurred on candles. This has emerged near the strong resistance level of 11760 and therefore, this reinforces this level once again as the credible resistance for the markets.

We have an extended weekend this time as Monday is a trading holiday because of General Elections voting in Mumbai. Even if some mild up-moves are seen, they will remain capped and some caution may prevail towards the end of the session. The NIFTY premium on the May series remains much higher than normal and this is likely to keep upsides under check. While continuing to avoid any aggressive purchases, a cautious outlook 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)