Stock Market

Trade setup for Monday: Nifty likely to remain rangebound, avoid shorts

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Friday session on Dalal Street went off much on the expected lines.

The markets saw a steady start and after remaining rangebound in the morning session, it reacted in an extremely volatile manner to the Interim Budget proposals.

At one point, Nifty came off nearly 150 points after a sharp rise only to recover again.

After such wild swings back and forth, the benchmark index ended the day 62.70 points, or 0.58 per cent, higher. In one of our previous notes, we had mentioned that despite any volatility or upward moves that the market may witness, it will continue to be broadly guided by macro technical level.

Going by Friday’s trade, even with the strongest of the initial moves, the index halted the moment it went beyond the all-important 10,950 mark, which is acting as a resistance for many weeks now. To put this in perspective, unless Nifty moves past this level, sustainable upward moves would be difficult to come by.

Monday’s session might see a flat to modestly positive start.

The Interim Budget is likely to be taken positively and as one of the balanced ones, and we might see Nifty attempt to inch higher once again.

The index is now trading above its key moving averages. Going forward, we expect the market to face resistance at 10,950 and 11,085 levels.

Supports come in at 10,840 and 10,760 levels.

The Relative Strength Index (RSI) on the daily chart stands at 55.8109.

It remains neutral and shows no divergence against price.

The daily MACD remains bearish as it trades below the signal line.

A white body has emerged on the candles.

Apart from this, no significant formations were observed. Through pattern analysis of the daily charts, it was observed that despite the failure of the ascending triangle formation, Nifty continues to be in a broad range.

Also, along with this, the index remains trapped in a range with the 10,950 level acting as a major resistance for the immediate short term. Overall, Nifty is expected to remain in a broad range and trade with a positive bias.

It is also expected to make attempts to inch higher towards 10,950 level and move past it.

On the other hand, the 10,740-10,840 zone remains an important support zone, as all key moving averages fall in this area.

We recommend avoiding shorts.

Keep making stock-specific purchases as long as the indices remain above their critical supports.

A cautiously positive outlook is advised for the day. (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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