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Trade setup: Nifty50 needs to top 11,495 level for fresh leg of rally

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On expected lines, the market made no major headway and continued to consolidate and trade with a corrective bias on Thursday. After opening on a negative note, the NSE benchmark Nifty did manage to recover its morning losses and traded briefly in the positive zone.

However, the index once again came under corrective pressure in the second half of the session, as it finally ended with a loss of 50.05 points or 0.44 per cent.

As we approach the end of the truncated trading week, we see market continuing to trade on the similar lines. A subdued opening is expected, and we will continue to see the Nifty trading in a range with no likelihood of making any meaningful moves.

Friday is expected to see the levels of 11,440 and 11,495 acting as immediate resistance area. Supports may come in at 11,340 and 11,280 zones.

The Relative Strength Index (RSI) on the daily charts stood at 62.1091. RSI has made a fresh 14-period low, which is bearish. The indicator has set a fresh 14-period low while the Nifty has not, and this has also resulted into Bearish Divergence.

The daily MACD stays bearish while it trades below its signal line. Apart from a small black body, no significant formations have been observed on the candles.

Overall, it is now fairly evident that the Nifty has marked 11,495 as an intermediate top and is set to consolidate in a broad range with this level acting as immediate resistance area. Even with upmoves, no meaningful rally is expected unless the Nifty moves past this level.

We expect rangebound consolidation to continue with the levels of short term 20-DMA acting as its base. We recommend continuing to approach the market in a selective manner and vigilantly guarding profits at higher levels.

STOCKS TO WATCH: Relatively better technical set up is seen in stocks like Tata Motors, ICICI Bank, DLF, Strides Pharma, Godrej Consumer, Godrej Industries, RBL Bank, KPIT and Titan.

(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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