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Market outlook: Nifty50 resumes rally; crucial for it to top 10,784

The domestic equity market on Monday made a buoyant start to..

The domestic equity market on Monday made a buoyant start to the week. The market opened on expected lines with modest gains and traded in a range in the first half of the session. We saw further strength coming in in the second half of the day.

The benchmark Index Nifty50 finally ended the day with a decent gain of 97.25 points or 0.92 per cent. The market has resumed its upmove after a brief corrective spell after testing the immediate past high level of 10,784.

As we approach Tuesdays trade, we see the upbeat sentiment persisting. The market is likely to enjoy a positive start to the day. That said, market still face chances of consolidation at higher levels, and 10,784 will remain important level to watch for.

Market is still expected to face resistance at these levels in the immediate short term. The levels of 10,765 and 10,790 will act as immediate resistance area for the market. Supports will come in at 10,675 and 10,630 zones.

The Relative Strength Index (RSI) on the daily chart is 63.5806 and it remains neutral showing no divergence against the price. The daily MACD stays bullish, while trading above its signal line.

Pattern analysis reveals that after achieving a breakout from the broad rectangle zone, the Nifty suffered a classical throwback and suffered a minor corrective decline. After a brief consolidation, Nifty has resumed its upmove. Key would be to see if it faces resistance once again at 10,784 levels.
Overall, a modestly positive, but quiet start is expected in the trade on Tuesday. It is advised not to attempt to create shorts at higher levels. We will continue to see stock specific performance. The undercurrent remains very much buoyant. The levels of 10,784 will be important to be watched as the market may face resistance at higher levels.

Even if some resistance is found at higher levels, the market will see more consolidation once again in a given range than outright correction. We continue recommend making stock specific purchases with any decline that the market offers.

While continuing to guard profits at higher levels, neutral to positive outlook is advised for the day.

STOCKS TO WATCH: Fresh long positions were seen being added in Federal Bank, Nalco, Exide Industries, JSW Steel, ICICI Bank, Reliance Naval, Power Grid, PFC, Hind Petro, YES Bank and Titan.

(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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