Home Market Trade setup for Monday: Nifty50 may see some consolidation at higher levels

Trade setup for Monday: Nifty50 may see some consolidation at higher levels


Indian equity market followed up positive closing of the expiry day on Friday. The market saw a gap up opening with a renewed vigor, sustained it all throughout the day and the Nifty ended the day with gains of 74.50 points or 0.70 per cent. We enter into a truncated week with Tuesday being a trading holiday. Barring some more consolidation, we expect this upmove to spill over to coming week as well.

Though we see some possibilities once again of consolidation happening at higher levels, we expect a quiet to modestly positive start to the trade on Monday. The market is likely to see this expansion happening until its next logical targets of 10,750-10,800 zones. However, this is less likely to happen without any intermittent consolidation spells.

Monday will see the levels of 10,730 and 10,765 working out as immediate resistance for the market. Supports exist at 10,660 and 10,610 zones.

The Relative Strength Index – RSI on the Daily Chart is 67.7660. RSI has marked a fresh 14-period high which is bullish. It remains neutral and shows no divergence against the price. The Daily MACD remains bullish trading above its signal line. On the Candles, a rising window occurred. This is essentially a gap and usually sees a continuation of upmove.

Pattern analysis shows that after resisting to an important pattern resistance area for couple of days, the Nifty has attempted to break out of the rectangle formation. This has happened as a breakaway gap and we are all likely to see continuation of this upmove.

Broadly speaking, given the current set-up, we might see this breakout resulting into a short phase of fresh upmove, we also cannot discount the possibility of small throw backs occurring. Traders and investors are required to mitigate these risks of throwbacks happening in this otherwise bullish environment. These can be done with choosing stocks very selectively, rotating sectors and remaining vigilant at higher levels. Overall, positive outlook is advised for the day.

STOCKS TO WATCH: Long positions were seen being added in stocks like Federal Bank, Axis Bank, BEL, Equitas, TV18Broadcast, Dabur, Jindal Steel, DHFL, Kotak Bank, Reliance, Tata Power and Hindustan Zinc.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])

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