At one point in time, the index had recovered nearly all its day’s losses. However, this recovery was not sustained as the markets gave up again. The headline index ended the day with a net loss of 109.40 points (-0.62%).
The current week is a shortened one with just three trading days. The markets have exhibited a cautious and tentative move which is much on the anticipated lines.
The options data show not only Call writing taking place at 17,800 and higher strikes, it also showed Put unwinding happening at 17,800 levels. This means that there are high chances that the level of 17,800 continues to offer strong resistance to the markets.
For any sustainable up move to happen, moving past 17,800-18,000 will be extremely crucial for the markets.
Tuesday is likely to see a tepid start to the day. The levels of 17,750 and 17,835 will act as resistance points. The supports come in at 17,600 and 17,560 levels.
The Relative Strength Index (RSI) on the daily chart is 57.13. It is neutral and does not show any divergence against the price. The daily MACD is bullish and stays above the signal line.
The pattern analysis shows that the levels of 17,800 was a double top resistance for Nifty. The index managed to move past this resistance briefly but eventually slipped below this point.
This keeps the level of 17,800 as one of the important pattern resistance levels in the immediate near term.
Overall, Nifty will continue to show a tentative bias for the next two days. It is highly unlikely that the markets show any runaway up move very soon. Given the shortened week, there are greater chances that the cautious approach may prevail in the markets. It is likely that the action stays highly stock-specific in nature.
Also, so long as Nifty is below the 18,000 levels, it will continue to stay vulnerable to selling pressures from higher levels.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at [email protected])
