Outlook For Thursday: Mild Technical Rebound Likely; NIFTY Prone To Weakness At Higher Levels
In a thoroughly lackluster session, the markets remained in a very narrow range and spent the entire session oscillating in a capped movement. After suffering a deep cut in the previous session, some recovery was expected, but that did not materialize. However, on the positive note, the NIFTY managed to keep its head above the crucial support zone. The headline index finally settled with a minor gain of 23.05 points (+0.21%).
The analysis for Thursday remains on similar lines. We have weekly options expiry, and it is broadly expected that the NIFTY will continue to hold the crucial support zone of 10780-10800 levels. If there are no overnight adverse developments, a quiet start to the trade is expected with some mild technical recovery likely from current levels. The 10800 PUT saw the high volumes and has the maximum PUT OI built and is primarily expected to act as support.
While keeping a very close eye on the crucial supports, the levels of 10885 and 10910 are expected to act as resistance. The supports come in at 10780 and 10710.
The RSI stands at 42.57 on the daily charts; it stays neutral and does not show any divergence against the price. The daily MACD remains in the continuing buy mode, but it is seen sharply narrowing its trajectory. No notable formations were seen on the candles.
While having a look at the pattern analysis, a sharp decline got triggered near the neckline area of the rounding top formation that the NIFTY breached. This has shifted the resistance zone lower and has reinforced its credibility as the resistance zone.
With a stable start expected for Thursday, we still reiterate a very cautious view of the markets. The NIFTY is due for a technical rebound, but in the same breath, it is very much likely that the markets find this rebound difficult to sustain at higher levels. We strongly recommend continuing to maintain a highly cautious and stock-specific view on the markets.
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)