Outlook For Friday: Volatility May Stay; Higher Chances of NIFTY Consolidating In A Defined Range
The expiry of the derivative series infused a lot of volatility on the expected lines as the NIFTY traded in a wide 100-points range during the day. After a day of a breather, the markets resumed its up move with vigor and volatility. The NIFTY saw a positive opening and strengthened further in the morning trade. The morning session very extremely volatility to such an extent that the Banknifty Index saw a vertical 1000-point spurt in a very short time and gave up some 700-points later. After moving back and forth in either direction while remaining primarily bullish, the NIFTY ended the day with a net gain of 131 points (+1.15%)
Though a quiet start to the trade is likely, the volatility will continue to exist in the markets. The levels of 100-DMA which currently stands at 11411 can be considered as an immediate and major support for the markets in the event of any consolidation going ahead. On the upper-side, the zones of 11650-11700 will be important to watch. The NIFTY appears to be overstretched on the short term charts, and if it consolidates at current levels, it should not come as a surprise. Chasing up-moves will continue to remain a risky affair, more so, when done blindly.
Friday is likely to see the levels of 11650 and 11700 acting as resistance. Supports will come in lower at 11475 and 11410. The trading range is expected to remain broader than usual.
The RSI on the daily chart is 62.76; it continues to remain neutral without showing any divergence against the price. The daily MACD is bullish while trading above its signal line; PPO stays positive.
The pattern analysis shows that the NIFTY took a breather after two steep up-moves and when it took a breather, it took support at 100-DMA on a closing basis. This level, going ahead, will remain important support to watch.
The NIFTY exhibits a buoyant intent; it also remains highly overstretched on the short-term charts. NIFTY has ended outside the upper Bollinger band. However, the bands are currently 80% wider-than-normal, and any relentless move on the higher side either becomes unsustainable or highly risky. The NIFTY may likely pull itself back inside the band and return in a less volatile range. We recommend remaining highly stock specific and chase up move in a very cautious way while vigilantly protecting profits at higher level.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)