Tuesday Set To See A Stable Session If Key Levels Are Held
In a better-than-expected move by the markets, the benchmark index went on to post gains for the fourth day in a row. After a flat start, the NIFTY traded in a capped range in the initial trade. The second half of the session saw the markets getting stronger and, in the process, the index went past its overhead resistance points of 50-DMA and 200-DMA which existed at 10824 and 10861 respectively. The markets held on to itself and finally ended the day with a decent gain of 88.45 points or 0.82%.
The NIFTY has ended a notch above its two resistance points; if we have no overnight negative news flows to deal with, we can expect a positive start to the trade. In normal course, since the NIFTY has ended at the high point of the day, it is likely to give some follow-up up-moves. So long as NIFTY holds itself above 10825, it is expected to make its logical move towards the 10950 level, which remain the multi-month resistance point for the markets.
Tuesday is likely to see the level of 10910 and 10960 acting as immediate resistance area. Supports come in at 10825 and 10780.
The Relative Strength Index – RSI on the daily chart is 54.7705. It remains neutral and shows no divergence against the price. The daily MACD still remains bearish and trades below its signal line. However, it is seen moving towards a positive crossover.
A large white body emerged on candles. This candle is significant as it took the prices above the overhead resistance points and therefore, it lends credibility of the move.
Monday’s move has once again taken the NIFTY above all its moving averages. In order to move towards its one of the major resistances which is 10950, it will be important for the markets to keep its head above the 10825 levels. We expect the markets to continue with its current tendency of putting up highly stock specific moves. While refraining from creating shorts, we continue recommending making select purchases within the sectors that are rotating favorably. A positive 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)