Stock Market

Market outlook: Nifty prone to profit taking at higher levels

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Rising for the fifth day in a row, NSE benchmark Nifty, ended Wednesday’s session with a minor gain of 14.90 points or 0.14 per cent. Market exhibited positive intent, as it recovered from the low point of the day.

However, it continued see resistance near the 50-DMA and 100-DMA levels, which remain in close vicinity. On Thursday, approach the market with caution despite the fact that there is very evident positive undercurrent.

The 50-DMA and 100-DMA levels, which stand at 10,425 and 10,440, respectively, will continue to resist the market on a closing basis. The levels of 10,440 and 10,495 will act as immediate resistance area.

Supports will come in at 10,380 and 10,320 zones. The Relative Strength Index (RSI) on the daily chart is 56.4564, and it has marked a yet another 14-period high, which is bullish.

It continues to remain neutral showing no divergence against the price. The daily MACD remains bullish, while it trades above its signal line.

On the candles, a Hanging Man pattern was formed.

With such formation occurring during an upmove, it raises some caution at the current levels.

It has a potential to temporarily stall the rally. While having a look at pattern analysis, though the market continues to remain comfort zone, it facing short-term resistance as well. The levels of 50-DMA and 100-DMA, which remain in close vicinity to each other, are likely to cause short-term resistance area. Overall, the market has continued to exhibit a strong undercurrent.

It has continued to add open interest with each minor upmove.

However, it also faces as major pattern resistance at 50-DMA and 100-DMA levels.

Though we may not see any significant downside, the market certainly remains prone to volatile profit taking bouts at higher levels. We continue to advise protecting profits at higher levels.

There are higher chances that even if the market continues with its upmove, it might face some rangebound consolidation at higher levels.

Positive caution is advised for the day. STOCKS TO WATCH: Fresh long positions were seen being added JP Associates, Nalco, TV18 Broadcast, Vedanta, Sun Pharma, IDFC, Reliance, BHEL, Infibeam and Coal India. (Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara.

He can be reached at This email address is being protected from spambots.

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