INSUBCONTINENT EXCLUSIVE:
In a yet another short covering-fueled a rally on Monday, the Indian equity market continued its pullback and ended the session on a
Nifty saw a flat opening, but soon slipped into the red in the morning
However, after an initial blip, the market recovered from its morning lows.
After seeing a pullback of more than 100 points from the
intraday low, the index stayed in a sideways trajectory for the rest of the session
After coming off a bit from the high point of the day, the headline index ended 56.85 points, or 0.52 per cent, higher.
Nifty is not
entirely out of the woods as the upward moves have come on the back of short covering
If the current rally has to sustain, it would be necessary that the ongoing short-covering gets replaced by fresh buying
Until this happens, the sustainability of any bounce will be under question, and Nifty will remain vulnerable at higher levels.
We expect a
quiet start to the trade on Wednesday
The market will open after a gap on Monday’s holiday and will initially adjust to global trade
The 11,050 and 11,130 levels will act as resistance while supports will come in lower at 10,940 and 10,830.
The RSI on the daily chart stood
at 48.6948; it remains neutral and shows no divergence against the price
The MACD remains bullish and trades above the signal line
No significant formations were seen on the candles.
Pattern analysis shows market is limping back towards the neckline of the rounding top
that it breached a couple of weeks back
It has faced resistance several times near those levels
In the process, it has crossed above the short-term resistance point of 20-DMA, which now stands at 10,966.
Going ahead, weekly options data
shows Nifty might encounter some resistance in the 11,100-11,150 zone
We expect the market to make half-hearted attempts to move up, but any bounce from now on may not sustain at higher levels
The market is not retracting and correcting beyond a point from current levels as it eagerly awaits more round of reforms and announcements
from the government.
It is currently devoid of any positive trigger, and this will make any bounce unsustainable at higher levels
A cautious approach is advised for the day.
(Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst at Gemstone Equity Research -
Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
