Fridays session continued to witness consolidation, as the NSE benchmark Nifty50 oscillated in a capped range and ended with a nominal loss of 1.25 points or 0.01 per cent.
The market continued to show resilience, as it recovered significantly from the low point of the day before ending flat.
It is not yet the time to throw caution to the wind, as we enter expiry week. The market on the daily chart remains a little overstretched. Though buoyancy will continue to persist, investors still need to protect profits with each upmove.
Mondays opening is likely to be quiet. The levels of 10,580 and 10,625 will act as immediate resistance for the market. Supports will come in at 10,530 and 10,480 zones.
The Relative Strength Index (RSI) on the daily chart is 62.6975, and it remains neutral showing no divergence against the price. The daily MACD stays bullish while trading above its signal line. A spinning top that occurred on the candles signalled indecisiveness setup on part of the market participants.
Pattern analysis shows market continuing to resist pattern resistance area. This is the upper range of the broad rectangle formation that the Nifty has formed. Though market is expected to move past these levels, it may not happen without some consolidation happening.
Overall, despite buoyant undercurrent, there are certain factors, which we cannot ignore.
The Nifty PCR (put to call ratio) still continues to remain at elevated levels. Also, the sharp decline in volatility (India VIX), signals calmness. This calmness may become complacency, and may itself become cause of return of some volatility.
We will also see expiry happening this week as well. If we take a cumulative view of all of these factors, though it may not be a time to start shorting the market, but it is certainly a time where we continue to protect our profits vigilantly at higher levels. A cautiously positive view is advised for the day.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])