The Nifty went on to extend its upmove on Wednesday and tested its 200-DMA. After inching higher, the barometer resisted and ended the day closing just a notch below its 200-DMA of 10,741. In a range bound but volatile session, the market oscillated in a limited range and after resisting the 200-DMA mark for a couple of times, it ended the day posting gains of 43.25 points or 0.40 per cent.
Thursday is likely to see the Nifty opening on a flat note and look for directions. We approach the expiry of the current derivative series and we expect the session to not only remain dominated by rollovers, but also get impacted by volatility.
Though the previous session ended with gains, the market breadth remained a concern. It remained negative and the Niftys upmove lacked the conviction it required. The behaviour of the Nifty vis-à-vis the levels of 200-DMA will be important to watch.
We expect the levels of 10,760 and 10,830 acting as immediate resistance for the market while supports are expected to come in at 10,700 and 10,610.
The Relative Strength Index – RSI – on the Daily Chart is 56.7429. It continues to stay neutral showing no divergence against the price. The Daily MACD stays bullish while it trades above its signal line.
As evident from the charts, the area of 10,754 and 10,840 is a gap that the Nifty had created on October 4 when it started a steep decline. This area is going to be very turbulent and difficult for the market to negotiate.
We continue to recommend adopting a very cautious view on the market. Profits should be very vigilantly protected at higher levels as the Nifty continues to remain vulnerable to being pushed into some consolidation again. Highly cautious, selective and stock-specific approach is advised for the day.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at firstname.lastname@example.org)