INSUBCONTINENT EXCLUSIVE:
On expected lines, NSE Nifty on Tuesday failed to sustain at higher levels, and after coming off 500 points from the day’s high, the index
slipped below the psychologically important 9,000 level
It finally settled with a net loss of 230.35 points or 2.50 per cent at 8,967.05.
Volatility index or India VIX surged another 6.88 per cent
Nifty is expected to consolidate in a broad range, with the 8,550 level acting as a base.
The reason why the technical pullback did not
sustain, is that global equities are grappling with sharply declining relative strength against other asset classes such as treasuries,
corporate bonds and safe haven assets like gold
Amid this setup, we can expect the market to consolidate after sharp declines.
Dalal Street may again make a tentative start on Wednesday
The 9,150 and 9,310 levels will act as resistance
Support may come in at 8,805 and 8,605
The trading range is again expected to stay wider than usual over the coming sessions.
The Relative Strength Index (RSI) on the daily chart
was at 17.57 and continued to remain in the oversold territory
The indicator also showed a bullish divergence, as it did not mark a fresh 14-period low on the lines of Nifty.
The daily MACD remained
deeply bearish while trading below its signal line.
As per the pattern analysis, after testing the low near 8,550, Nifty has not yet
The index may now consolidate with a base near that point
The rest of the short-term indicators stand deeply oversold, but they have little relevance amid the global weakness.
When a trend is
powerful, oversold markets tend to remain oversold and keep moving lower
Just because a market is overbought is not a reason to sell
Similarly, an oversold market is not a good enough reason to buy.
Technical pullback, when the market is oversold, cannot be ruled out
However, as and when they occur, their sustainability is a matter of great concern.
Indian market, too, can see intermittent technical
rebounds, but we would recommend traders to buy only when an area formation is seen and some mild signs of bottoming out appear.
The global
texture will continue to affect our market as well
We recommend to adopt a highly stock-specific view and approach the market with high caution.
(Milan Vaishnav, CMT, MSTA, is a Consulting
Technical Analyst and founder of Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
