Outlook For Tuesday: Tepid Start To The Trade Likely; Aggressive Buying Must Be Avoided
On the anticipated lines, the equity markets reacted to the disturbance in the Middle East that was caused by attacks on Saudi Arabia’s oil assets. This led to a spike of over 10% in the international crude prices, and the equities saw a lower opening. The Indian markets opened lower but demonstrated resilience to the weakness, and at one point of the time, it recovered the bulk of its losses. However, the second half of the session saw the NIFTY paring gains once again, and the headline index saw itself closing with a net loss of 71.40 points (-0.65%).
Despite showing resilience, the NIFTY seems to have stalled the pullback that it saw over the past couple of days. The global environment remains anxious, and the developments in the Middle East are observed with a sense of anxiety as they have enough potential to trigger risk-off in the equities.
Unless the smoke settles on the commodities front, we do not expect a runaway rally in the equities as they also remain weak from the technical aspect as well. Tuesday is likely to see a tepid start to the day, and the levels of 11060 and 11110 will act as strong resistance points. Supports come in at 10935 and 10910.
The RSI on the daily chart stands at 48.72; it stands neutral and shows no divergence against the price. The daily MACD stays above its signal line.
A spinning top occurred on the candles. The occurrence of a spinning top and the lower high on the bar is enough sign that the market participants are treading very cautiously and exhibiting an indecisive behavior.
The sentiments on the global landscape are far from being positive. Even if we witness a stable session, aggressive buying must be avoided. Apart from this, the level of 11000 will be crucial to watch as it has the highest Put OI built up and the second-highest Call OI built up. If the NIFTY slips below the 11000 levels and stays below it for long, then it may infuse some more weakness in the markets. A highly 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)