INSUBCONTINENT EXCLUSIVE:
After the rally following a good set of GDP numbers, the market fizzled out on expected lines
Soon after positive opening, the NSE benchmark Nifty pared its gains and remained rangebound.
The index extended its losses in the last hour
and half of the trade, wherein Nifty pared over 150 points from the high point of the day and ended 98.15 points or 0.84 per cent
The overbought and overextended nature had some correction imminent over the past couple of sessions.
The US market is closed for Labor Day
and there will be no overnight cues to deal with.
We see a tepid start to the day on Tuesday and expect some stability in the initial trade,
but the market is expected to continue to trade with corrective undertone with the levels of 11,760 now acting as immediate top for the
With levels of 11,650 and 11,760 acting as resistance, supports may come at 11,520 and 11,460 zones.
The Relative Strength Index (RSI) on
the daily chart is 60.0479
The RSI marked a fresh 14-period low, which is bearish
negative crossover and is now bearish trading below its signal line
On the candles, a big engulfing bearish candle has occurred
It remains significant as it has emerged near the resistance area and after an upmove
It can mark a potential top for the market and may temporarily stall the upmove.
Overall, in absence of any overnight global cues and as the
technical indicators suggest, we may continue to see the market trading with corrective undertone.
What the market is witnessing is a
classical correction after a sharp upmove and this broad consolidation is likely to be extremely healthy for the market.
We recommend
remaining extremely light on exposures and avoiding shorts as the primary uptrend remains intact
All downsides should be utilised to make selective purchases
Overall, while remaining light on exposures, cautious approach is advised for the day.
STOCKS TO WATCH: Short positions are seen being added
in stocks of South Indian Bank, CG Power, ITC, Tata Motors, Reliance, BEL, Powergrid, Suzlon, Escorts, Canara Bank, Infosys, SAIL and YES
Bank.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
