The domestic stock market continued to consolidate, as NSE Nifty fell for a third straight session on Tuesday.
The equity market saw a mildly positive start, but slipped into the red after a few minutes.
The index continued to grow weaker as the day progressed and finally settled below the 12,000 level, with a loss of 54 points or 0.45 per cent at 11,994.20.Indian stock market is trading at a crucial juncture.
F-O data showed creation of fresh shorts, as Nifty futures open interest saw a net increase of 9.46 lakh shares or 6.96 per cent.
The short-term 20-DMA, which is at 11,974, stayed defended.
It will be an important level to watch out for going ahead.Options data showed that 12,000 had the maximum builtup of Call open interest, which makes this level a critical zone to watch unless a tactical shift occurs.Wednesdays session is likely to see 12,065 and 12,130 levels act as resistance points.
Supports may come in at 11,950 and 11,900.The Relative Strength Index (RSI) on the daily chart stood at 56.60 and marked a fresh 14-period low, which is bearish.
It also showed a bearish divergence against the price.The daily MACD was bearish and traded below its signal line.
The Percentage Price Oscillator (PPO) remained negative.
Apart from a black body, no other formations were seen on the candles.As per pattern analysis, the 12,103 level, which marked as a major double top resistance, continued to hold as of now.
Nifty, despite making an incremental high, has once again slipped below 12,103 and has not yet achieved any breakout.All in all, despite the recent corrective moves, the undercurrent remained strong.
The market is facing consolidation rather than a correction, and it is likely to stay limited as of now.We again advice traders to avoid shorts at any level.
Instead, downsides should be used to make select purchases.
It would be important for Nifty to stay above the 20-DMA level of 11,974 on a closing basis.A cautiously positive outlook is advised for the day.(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research - Advisory Services, Vadodara.
He can be reached at milan.vaishnav@equityresearch.asia)