After two days of breaking out above the 10,490-mark, the Indian equity market took a breather and consolidated on Tuesday. The benchmark Nifty50 ended with a negligible gain of 13.40 points or 0.13 per cent. However, it continued to pile up open interest.
Though we expect a quiet opening on Wednesday, we expect that despite some consolidation, we will ultimately see the Index inching higher after some rangebound movement, if any.
The buoyant intent is further support by inter-market analysis of the Hong Kong market, with which our market remains very strongly co-related. Hang Seng Index has went on to scale further lifetime highs.
Wednesday will see the levels of 10,655 and 10,710 working out as resistance area for the market. Supports came in at 10,590 and 10,545 levels.
The Relative Strength Index (RSI) on the daily charts is 67.5491 and it has marked its fresh 14-period high, which is bullish. The daily MACD stays bullish, while trading above its signal line. No major formations were observed on the candles.
The pattern analysis reveals the Nifty is taking some breather after two days of breaking out. This consolidation may last, but overall under current continue to remain buoyant.
After two days of upmove, it will be no surprise if the market sees a rangebound consolidation or movement in a defined range.
However, at no point, it shows any sign of a major corrective move. In most likelihood, we may see the market consolidating for a while and then resuming its upmove.
We continue to recommend making selective profits with each consolidation that occurs. Overall, continuation of positive outlook is advised for the day.
STOCKS TO WATCH: Fresh longs were seen being built in stocks like ITC, Tata Motors, Ashok Leyland, Suzlon, NCC, Arvind, Reliance Industries, Tata Motors DVR, Power Grid and Coal India.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])
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