It was a negative day for the markets on Wednesday as the Nifty continued to decline for the second day in a row. After seeing a flat to mildly positive start to the day, the morning session remained quite resilient to the Asian peers.
However, as the day progressed, the markets started to give up some gains and tested the falling trend line which it has breached on the upside. Some recovery was seen in second half of the day, but that was given up once again. The benchmark index Nifty50 ended the day losing 56.15 points (-0.53 per cent).
Thursday is the last trading session of this truncated short week. Friday is a trading holiday on account of Guru Nanak Jayanti. We expect a soft start to the trade, but see mild attempts by the Nifty to pull back. However, no major moves are expected, and we expect caution to weigh in because of the long weekend.
Markets are likely to exhibit a tentative behaviour with the levels of 10,650 and 10,695 acting as resistance area. Supports are expected to come in at 10,550 and 10,510 zones.
The Relative Strength Index – RSI – on the Daily Chart is 51.3129 and it stays neutral against the price while not showing any kind of divergence. Daily MACD stays bullish while trading above its signal line. PPO too remains positive. No significant formations were observed on Candles.
The Nifty has taken support in the Wednesdays trade on the falling trend line which it had breached on the upside. Now this, which was a resistance area earlier, is now acting as support. We expect the markets to continue taking support in the 10,500-10,550 zones if it must consolidate in the immediate short term.
Overall, it would be wise for the traders to remain modest on exposures. Heavy exposures on either side must be avoided. Fresh purchases, if any, should be kept extremely selective and all upmoves should be utilised to protect profits. Though downsides for the markets in the immediate future look limited, the upmoves too will be stalled unless the Nifty moves past the 200-DMA mark. Maintaining a cautious view 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 milan[email protected])
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