Stock Market

Trade setup: Nifty likely to stay tentative; 10,860 to offer support

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The Friday’s session saw a lot of volatility dominating the session, as NSE benchmark Nifty saw wild swings on either side.

Despite trading in a defined range for the major part of the session, the market saw a sharp selloff in the second half of the trade. Despite the Nifty recovering over 80 points from the day’s low, the index settled the day losing 47.10 points or 0.43 per cent. As we approach fresh week and a month, we need to tread with caution.

If we inspect several important data points of the past couple of days, it was seen that the level of 10,860 has been tested thrice and the Nifty managed to bounce back from there. Monday is likely to see a stable start again, but we expect the Nifty to remain rangebound and tentative in approach.

However, with each passing day, the technical pullback remains imminent. Monday is likely to see the levels of 10,990 and 11,045 playing out as immediate resistance area.

Supports may come in at 10,890 and 10,810 zones. The RSI on daily charts is 32.8807.

A bullish divergence was seen on the charts as the Nifty set a fresh 14-period low, while the RSI did not.

The daily MACD stayed bearish while trading below its signal line.

No significant formations were seen on the charts. If we take a broader view of the market, after nearly 800-point decline from the lifetime high, the Nifty is now showing some signs of a potential bottom formation on the short-term charts. It also remains oversold on the short-term charts and shows high possibility of the technical pullback. In event of any weakness, the level of 10,860 is likely to send support as the Nifty has pulled back twice after testing those levels again.

Very low volumes in cash segment as compared to futures segment also point towards likely exhaustion in selling in the near term. We strongly recommend staying away from creating shorts continue preserving liquidity for select purchases. STOCKS TO WATCH: Long positions were seen being added in ONGC, GAIL, Axis Bank, Canfin Home, MM Financial, ITC, HDFC Bank, HDFC, Jet Airways, Infosys, RPower, Tata Chemicals And Asian Paints. (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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