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  • Milan Vaishnav, CMT, MSTA

Thursday Trade Setup: Expiry May Infuse Volatility; These Levels To Play A Decisive Role Going Ahead

In a predominantly bearish session, the NIFTY gave up some part of its gains and ended the day with a negative note. The markets had shown signs of exhaustion in the previous session and went on to post some corrective loss. After opening on a negative note, the NIFTY remained in a falling trajectory throughout the day and showed no signs of any recovery during the session. In the end, the headline index ended with a net loss of 148 points (-1.28%).

The NIFTY had created a substantial gap between Friday and Monday, and this gap partially got filled on Wednesday. We expect a subdued start to the trade on Thursday and expect the corrective mood of the markets to persist for some time. The gap that is partially filled may get entirely filled over the coming days as per the current technical structure of the markets. Wednesday’s low, which coincided with the 100-DMA which currently stands at 11413 will be an important level to watch.

Thursday is likely to see a quiet start to the day, and the levels of 11490 and 11550 will act as resistance points. Supports come in at 11400 and 11310.

The RSI on the daily chart is 59.85; it stays neutral and does not show any divergence against the price. The MACD remains bullish and trades above its signal line. Apart from a black candle that emerged, no significant formations are seen on the Candle.

The pattern analysis of the daily chart shows that the NIFTY has taken support near the 100-DMA level on a closing basis which currently remains at 11413. Any closing significantly below this level will extend the corrective action of the markets.

We have an expiry of the current derivative series, and this is likely to keep the session volatile. The 11500 strike has the highest Call OI while the 11400 strike holds maximum Put OI. Unless a tactical shift happens on either side, the NIFTY may oscillate within this range. Any change of OI below 11400 in Put will invite weakness in the markets. The probability of the markets extending its corrective action is more and given this setup; we recommend keeping purchases very selective and limited.

Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)