The session on Thursday remained lacklustre as the market headed nowhere and spent the entire session in a narrow range. The benchmark Nifty50 oscillated in a 30-point range and finally settled the day with a modest loss of 3.90 points or 0.04 per cent.
The market continued to consolidate, and going ahead into Friday's trade, we expect this consolidation to continue. The levels of 10,490 will continue to pose serious resistance, and given the extended weekend this time, we will also see some cautious outlook weighing on the market.
For any serious upmove to occur, the market will have to take out the levels of 10,490 comprehensively, and this may not happen too soon too fast.
The levels of 10,490 and 10,535 will continue to pose serious resistance to the market. The supports come in much lower at 10,375 and 10,280 zones.
The Relative Strength Index (RSI) on the daily chart is 60.7827 and continues to stay neutral against the price. The daily MACD is bullish, while trading above its signal line.
No significant formations were observed on the candles. While having a look at pattern analysis, the Nifty has comfortably moved outside the falling channel and have tested the 10,490-mark on expected lines.
However, given the overall structure on the charts, we are likely to see some more consolidation happening before we see any comprehensive and sustainable breakout.
Overall, it is also worth taking note that the short term 20-DMA has cut the 50-DMA from above. The interpretation of this is that if this continues and if the 20-DMA slips significantly below the 50-DMA, it can signal loss of momentum for the market in the immediate short term.
With Monday being a trading holiday, we are likely to see consolidation happening on a cautious note in the market. It is required that the market is approached with a highly stock-specific focus and on a very cautious note.
STOCKS TO WATCH: Short covering continued on counters like IDFC, IDFC Bank, PNB, Jindal Steel, India Cements and Jet Airways. Fresh longs were seen in RCom, TV18 Broadcast, JSW Steel, SAIL, Sun Pharma and Adani Power.
(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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