The equity market had a relatively stable and strong session on Thursday despite the NSE benchmark Nifty coming off nearly 50 points from the high point of the day. The index finally settled 83.70 points or 0.78 per cent lower.
Though gains were observed across board, the stocks and sectors, which received a good beating in the previous few sessions, saw some value buying from the lower levels.
From the structure on the charts, the upmove is likely to continuing on Friday as well. A modestly positive start can be expected, but in the same breath, the zone of 10,820-10,845 will offer resistance at higher levels. At these levels, we see market taking a breather and entering into some fresh consolidation before any decisive move.
Friday will see the levels of 10,820 and 10,850 acting as potential resistance zone. Supports may come in at 10,735 and 10,680 zones.
The Relative Strength Index (RSI) on the daily chart is 58.3524. The RSI has marked a fresh 14-period high, which is bullish, but it does not show any divergence against the price. The daily MACD has reported a positive crossover and is now bullish while trading above its signal line. On the candles, a Rising Window occurred. It is essentially a gap, which implies continuation of the upmove.
Pattern analysis suggests that the market has got some steam left. However, these upmoves will find resistance in the 10,820-10,850 zones as this happens to be a major pattern area resistance for Nifty.
Overall, the momentum may persist in the market, and we may still continue to see the dips, if any, being used to make quality purchases. However, in the pursuit of momentum, the zones of 10,820-10,850 are expected to offer formidable pattern resistance to the market.
We recommend continuing making fresh purchases with each opportunity that volatility offers, but at the same time, profit needs to be vigilantly protected at higher levels, as the possibilities of some volatility and profit taking cannot be ruled out if the Nifty tests 10,820-10,850 zones.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])