INSUBCONTINENT EXCLUSIVE:
The stock market on Friday traded on stable lines, as the NSE benchmark Nifty continued to inch higher and gave a breakout from a major
double top formation, which had an important resistance at 11,170-11,175 levels.
The index ended with a decent gain of 111.05 points or 0.99
per cent, with significant addition in open interest, indicating good buying that was associated with the current breakout.
A we approach
levels.
In the same breath, we also must not overlook the fact that few of the indicators remain overbought and overstretched on the charts,
and this may result in Nifty taking some breather at higher levels.
Monday will see the levels of 11,295 and 11,360 acting as immediate
resistance area for the Nifty
Supports may come in at 11,210 and 11,170 zones.
The Relative Strength Index (RSI) on the daily chart stands at 73.9912, and has marked a
fresh 14-period high, which is bullish
However, it trades slightly in the overbought zone.
No divergence of any kind was observed against the price
The daily MACD stays bullish, while trading above its signal line
On the candles, a rising window occurred
This is usually a gap and results into continuation of the present upmove.
Pattern analysis shows that the Nifty encountered a major
resistance in form of a double top at 11,171, which happened to be its previous high
The index has managed a breakout from these levels and is set to inch higher.
Overall, the previous session saw a significant development in
form of a breakout and certainly set a buoyant stage for coming days
Having said this, it also increases the possibility of a throwback as the market remain slightly overbought.
We are expected to see a stable
opening on Monday, but in the same breath, we may also see some paring of gains at higher levels
All such throwback activities should be continued to be utilised in making select purchases.
While remaining cautious at higher levels,
positive outlook is advised for the day.
STOCKS TO WATCH: Long positions were seen being added in stocks like Hindalco, Bank of India, IDBI,
Reliance, State Bank of India, YES Bank, SAIL, BHEL, REC, CG Power, IOC and Tech Mahindra.
(Milan Vaishnav, CMT, MSTA is Consultant
Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
