Nifty opened on a quiet note. After an initial slip, the index stayed in the upward rising trajectory for the rest of the session. The last hour of trade remained particularly stronger and the headline index ended the session with a gain of 159.80 points, or 1.55 per cent.
Wednesday is the penultimate day of the current derivative series. The session will be dominated by rollover-centric activity. The weekly options data showed strike price 10,500 has maximum concentration of Call open interest and this level may act as a key resistance going ahead. The broader momentum is absolutely stable and the 100-DMA, which currently stands at 10,057, will continue acting as a key support for Nifty in the near term.
Wednesday’s session is likely to see a stable start. The 10,500 and 10,565 levels will act as immediate resistance, while supports come in lower at 10,405 and 10,340 levels.
The Relative Strength Index (RSI) on the daily chart stood at 68.71; it showed a bearish divergence against price. The bearish divergence has resulted out of the RSI not forming a fresh 14-period high, while Nifty has not marked a 14-period high. The daily MACD remains bullish and trades above the signal line. A white body has appeared on the candles, indicating a secular move on the upside during the day.
Pattern analysis showed Nifty was comfortably placed in the upward rising channel. Currently, the index trades above its 50- and 100-DMA. In the event of any corrective move, the 100-DMA will be expected to act as support.
The current market momentum is still purely liquidity driven, and it is a part of the global risk-on setup that is taking place. If the current force on the upside continues, Nifty might end up piling on some more gains. However, if Nifty stays in such a technical setup, it would warrant more vigilance at higher levels. We recommend avoiding heavy positions on either side and staying light on overall exposure while moving with the momentum.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])
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