Home Market Trade setup: Nifty may consolidate at higher levels; 10,700 to be key

Trade setup: Nifty may consolidate at higher levels; 10,700 to be key


After taking a days breather, Indian stock market continued with its pullback rally on Friday, as the NSE benchmark Nifty rose by 172.55 points or 1.66 per cent.

The coming week will be a truncated one, as there will be a token one-hour Mahurat session on Wednesday on the occasion of Diwali and a market holiday on Thursday.

We expect stocks to remain broadly in a range over the coming days.

For Monday, even if the Nifty has extended its pullback, it has come off from its resistance area. This resistance area was the 100-point zone near 10,600-10,700 levels. In all likelihood, Nifty may see a stable start on Monday. However, the index may stall its pullback once it tests these levels.

Monday is likely to see the levels of 10,600 and 10,710 acting as immediate resistance area. Supports may come in at 10,480 and 10,410 levels.

The Relative Strength Index (RSI) on the daily chart stood at 51.2889, and it has marked a fresh 14-period high, which is bullish. The RSI also showed bullish divergence against the price. The daily MACD stayed positive, as it traded above its signal line.

All in all, as and when the market approaches the 10,600-10700 zone, there are higher chances that it may stall its pullback.

Also, there are chances that either we might see some mild corrective moves or Nifty may see itself getting pushed into some consolidation.

We recommend that until the index moves past the 10,700-mark, all up moves should be utilised to protect profits. Select purchases may be made, but more emphasis should be laid on protecting holdings at the higher levels.

STOCKS TO WATCH: Long positions were seen being added in stocks such as CG POWER, Axis Bank, Vedanta, Tata Steel, HDFC Bank, SAIL, Indiabulls Housing, Bharti Airtel, Marico, IGL, Tata Global and Bharat Forge.

(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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