INSUBCONTINENT EXCLUSIVE:
Investors continued to remain cautious as NSE benchmark Nifty settled lower for the seventh session in a row
Despite a stable start, the index remained under pressure and remained in a falling trajectory for the most past of the session, with a few
feeble attempts to bounce back
Though the market breadth remained negative, it was relatively better
precariously in balance near its important supports
Also, a good number of shorts got added as the net open interest increased by over 6.52 lakh shares
We expect a quiet start to the trade once again, but it would be extremely important for the index to keep its head above 10,620 on a
closing basis and crawl above the 10,690 level to be back inside the broad trading range.
As we stare at an overdue counter-trend technical
pullback, we expect the levels of 10,690 and 10,745 to act as immediate resistance
Supports may come in at 10,620 and 10,560.
The Relative Strength Index (RSI) on the daily chart stood at 38.0215 and it has marked a fresh
14-period low, which is bearish
It did not show any divergence against the price
The daily MACD stayed bearish and traded below its signal line.
A technical pullback is much overdue
To avoid any serious interim weakness, Nifty will have to keep its head above 10,620 level on a closing basis and move past the 10,690 zone
to be back inside the trading range.
The index hangs precariously in balance, but still, it makes a good case for a technical pullback, as
it remained oversold on the short term charts.
With open interest having increased significantly with the declines, there are large number
of shorts, which might lend support at any immediate lower levels
It is suggested to keep exposures modest, preserve liquidity and make highly selective purchases while protecting profits at higher
levels.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
