Stock Market

Trade setup: Nifty in overbought zone, avoid fresh purchases

   Download Android App    Share in      FullScreen   CheckVideos

After making a buoyant start to the trade on Monday, the NSE benchmark Nifty pared gains and traded rest of the session in a rangebound manner.

The index ended with a modest gain of 26.30 points or 0.23 per cent.

The paring of gains from higher levels was a sign of a very short-term fatigue. Investors can expect a quiet start to the trade on Tuesday.

We might continue to see modest upmoves, but despite the buoyant setup, the Nifty is overbought and needs to consolidate as It continues to remain vulnerable to profit taking at higher levels. Tuesday will see the levels of 11,430 and 11,455 posing as fresh resistance to the Nifty.

Supports may come in at 11,320 and 11,270 levels. The Relative Strength Index (RSI) on the daily chart is 71.1663.

The RSI continues to show bearish divergence on the charts.

While Nifty continued to trade at 14-period high, the RSI has not done so. The daily MACD stays bullish while trading above its signal line, but it has started to flatten its trajectory.

Though a rising window has occurred on the candles, it may not translate into much strength in the present context and structure of the charts. Pattern analysis shows that the Nifty has now successfully achieved a breakout from the 11,170-11,175 levels, which represented a previous high and a double top formation. Presently, Nifty is seen likely to exhaust its upmove and consolidate at higher levels. Overall, the Nifty is evidently overstretched on the charts and for it to see further sustainable upmoves, some amount of consolidation looks overdue. The index has started to show some signs of tiredness and fatigue.

At the present juncture, we recommend avoiding any kind of major purchases at current levels. We are likely to see some sector rotation during the expected rangebound consolidation, which will lend more strength to the market in coming days. While very vigilantly protecting profits at higher levels, a cautious view is advised for the day. STOCKS TO WATCH: Long positions were seen being added in stocks like ICICI Bank, PNB, State Bank of India, Hindalco, Axis Bank, PTC, IDBI, NBCC, PFC, NMDC, DLF, NCC, Hindustan Zinc, Coal India and TVS Motors. (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.

You need JavaScript enabled to view it. document.getElementById('cloak0d5137a4093d3721e9cf3f88329cad41').innerHTML = ''; var prefix = 'ma' + 'il' + 'to'; var path = 'hr' + 'ef' + '='; var addy0d5137a4093d3721e9cf3f88329cad41 = 'milan.vaishnav' + '@'; addy0d5137a4093d3721e9cf3f88329cad41 = addy0d5137a4093d3721e9cf3f88329cad41 + 'equityresearch' + '.' + 'asia'; var addy_text0d5137a4093d3721e9cf3f88329cad41 = 'milan.vaishnav' + '@' + 'equityresearch' + '.' + 'asia';document.getElementById('cloak0d5137a4093d3721e9cf3f88329cad41').innerHTML += ''+addy_text0d5137a4093d3721e9cf3f88329cad41+''; )




Unlimited Portal Access + Monthly Magazine - 12 issues-Publication from Jan 2021

Buy Our Merchandise (Peace Series)

 

Contribute US to Start Broadcasting


It's Voluntary! Take care of your Family, Friends and People around You First and later think about us. Its Fine if you dont wish to contribute and if you wish to contribute then think about the Homeless first and Feed them. We can survive with your wishes too :-). You can Buy our Merchandise too which are of the finest quality.

Debit/Credit/UPI

UPI/Debit/Credit

Paytm

STRIPE

Details
Category: Stock Market


21