Home Market Trade setup for Monday: Nifty likely to see some consolidation, protect profits...

Trade setup for Monday: Nifty likely to see some consolidation, protect profits at higher levels


Fridays session saw expected stalling of Niftys upmove after a breakout from a pattern resistance. The market remained in a capped range and after oscillating in a defined range, the benchmark index Nifty50 ended the day posting negligible loss of 4.30 points or 0.04 per cent. The Thursdays high of 11,078 has now become the immediate resistance for the market around which we expect some consolidation to occur before the index attempts to test its previous high.

Monday is likely to once again see a quiet and uneventful start to the trade. There are no negatively affecting global triggers and technically speaking, given the slightly overstretched indicators on the Daily Charts, some consolidation might continue.

We expect the week to begin with a rangebound trade with the Nifty expected to oscillate in a defined range. The corrective downsides, if any, may remain limited. The levels of 11,078 and 11,170 will act as immediate resistance area while supports should come in at 10,980 and 10,910 zone.

The Relative Strength Index – RSI on the Daily Chart is 66.4924 and it remains neutral and shows no divergence against the price. The Daily MACD stays bullish while trading above its signal line. No significant formations were seen on Candles.

If we look at pattern analysis, the Nifty has broken out from a falling trend line resistance which began from 11,170 and subsequently joint lower tops. Post the breakout and recent upmove, Nifty is seen taking a likely breather and this might result into some consolidation before it gathers strength to inch higher.

Overall, the general setup continues to remain bullish, but we might see Nifty stalling its upmove for some more time and consolidate. However, we recommend continuing making select purchases with each opportunity that any consolidation offers while also continuing to protect profits at higher levels. Shorts may be avoided as we might see Nifty attempting to test its previous high over coming days. Positive outlook is advised for the day.

STOCKS TO WATCH: Shorts were seen being added in stocks like NCC, ITC, UPL, Jindal Steel, Tata Power, PNB, South Indian Bank, BEL, Adani Ports, ONGC, Bank OF India, SAIL, Federal Bank and Nalco.

(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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