The markets saw a positive start to the day. After an initial blip, Nifty got stronger again and stayed strong throughout the day. The zone of 17,350-17,500 was acting as resistance. Nifty stayed near 17,500 for the majority of the time before it ended just a notch below that point. The headline index closed with a net gain of 172.95 points (+1.00%).
Market will not only have the weekly options expiry on Thursday, but also has monthly derivative expiry. The session will stay highly influenced by the rollover-centric activities. The level of 17,500 will act as an inflection point for the markets.
The previous session saw heavy put writing on 17,300 and 17,400 levels. However, the level of 17,500 continues to see accumulation of the highest call OI. This means that if Nifty is able to move past and stay above 17,500, it may see the up move getting comfortably extended.
If it stays below 17,500, it will also mean that the markets continue to consolidate again in the broader range.
The price action Nifty against the level of 17,500 will be crucial to decide the trend for the day. The levels of 17,555 and 17,680 will act as potential resistance points. The supports will come in at 17,410 and 17,330 levels.
The daily RSI stands at 60. It has marked a new 14-period high which is bullish. The daily MACD stays above the signal line and remains bullish. A rising window emerged. It results out of a gap on the up side and generally resolves in the direction of the trend.
The pattern analysis shows that Nifty was trading inside the defined 17,000-17,500 range. On Wednesday, it tried to break out of this consolidation zone and resume its up move. The index now trades above all the key moving averages.
Overall, even if the markets consolidate and stay below or around 17,500, that would be only because of the expiry influenced moves. Apart from this, looking at the technical setup, there are higher possibilities that Nifty extends the up move and inches higher.
We recommend avoiding shorts. Any move on the lower side must be used to pick up good quality stocks while continuing to vigilantly protect profits at higher levels. A positive outlook is advised for the day.
(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])
