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Market outlook: Nifty50 may consolidate a bit; watch out for the 10,490 level

On expected lines, the benchmark Nifty50 did attempt to inch..

On expected lines, the benchmark Nifty50 did attempt to inch higher and test the 10,490-mark, but it also faced stiff resistance at those levels.

The index after a marginal high saw corrective pressure in the second half of the session. The Nifty finally ended the day with a net loss of 19 points or 0.18 per cent.

Thursday's trade is likely to remain on the similar lines. The market may see a quiet opening, and may also show some buoyant intent, but the levels of 10,490 will continue to post stiff resistance to the market and force it into some more consolidation.

The levels of 10,490 and 10,535 will pose resistance to the market on Thursday. The supports came in at 10,350 and 10,310 zones.

The Relative Strength Index (RSI) on the daily chart is 61.1090 and it stays neutral showing no divergence against the price. The daily MACD stays in buy mode while trading above its signal line.

On candles, a not-so-classical 'Dark Cloud' occurred. The size of the candle is relatively small than what is usually required in such a formation, but this often reiterates the credibility of the resistance area where it occurred.

While having a look at the pattern analysis, the Nifty has managed to move out of the intermediate falling channel that it had created. However, it has inched higher, but has met with a stiff resistance at its previous high.

Also, the lead indicators remain neutral while marking a lower top though not confirming it.

All in all, while going into trade on Thursday, we recommend maintaining highly stock specific approach to the market.

We will see select components from specific sectors like infra and media, among others attempting to relatively out-perform. However, on a broader note, we still expect the market to face stiff resistance at 10,490-mark despite showing buoyant undercurrent.

There are all chances that the market may remain vulnerable to selling bouts at higher levels and be forced in consolidation for some more time. Cautious outlook is advised for the day.

STOCKS TO WATCH: Some short covering was observed in stocks like JSW Energy, Jet Airways, HCC, Fortis, Suzlon, Glenmark, Hindustan Zinc and Tata Global. Some relatively buoyant technical set-up is seen in stocks like JP Associates, Zee Learn, Punj Llyod, Dhan Laxmi Bank and Shriram EPC.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])

Original Article


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