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  • Milan Vaishnav, CMT, MSTA

Monday Set To See A Tentative Start To Trade; Isolated Out-performance From Few Pockets May Be Seen

Much on the expected lines, the Friday’s session remained quite sluggish and the markets consolidated with a negative bias while ending the day with a modest loss. The markets opened in a negative note and remained in the negative territory for the entire day. It did not take any directional cue and continued to oscillate back and forth in a limited range while keeping its head above key levels. While ending on the tentative note, the NIFTY closed with a modest loss of 22.80 points or 0.21%.

As mentioned in our previous daily note, NIFTY continues to show some exhaustion at current levels. We expect a tepid start to the trade and expect NIFTY to continue to consolidate with mild corrective bias. Despite no structural breakdown on the charts, we do not expect NIFTY to post any runaway rise so soon.

With Monday expected to see a tepid start to the trade, the levels of 11100 and 11160 will act as immediate resistance levels. Supports will come in at 11000 and 10910.

The daily RSI is 61.9540. It remains neutral and does not show any divergence against the price. The daily MACD is bullish and trades above its signal line. However, its trajectory continues to remain flattish. A spinning top appeared on the candles. Though not classical, it closely resembles a doji. Any such formation conveys the indecisive mind-frame of the participants and often show exhaustion if it occurs after an up move. This, however, requires confirmation on the next trading day.

While having a look at pattern analysis, it appears that the NIFTY is presently in a resistance that is created between the 10960-11118 levels. Though the NIFTY has managed to remain above 10950, it has not yet negotiated this resistance zone.

All in all, unless the level of 11118 is taken out comprehensively, NIFTY will not see any major up moves. The longer it remains below this area, higher will be the probabilities of it continuing to suffer profit taking bouts at higher levels. We recommend avoiding any major exposures and continue to adopt highly sector and stock specific approach until markets establish a firm directional course. A cautious view on the markets 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)