The domestic stock market saw heavy consolidation on Wednesday. It made a negative opening, dipped lower in the first half of the session, and then recovered over 75 points from the low point of the day.
The Nifty still ended the day with a minor loss of 15.95 points or 0.15 per cent. The index continued to consolidate near its 100-DMA, and also deliberated there and halted its pullback on expected lines.
At present, it remains in a trading zone without any directional bias, and it is likely to remain this way for some more time.
On Thursday, the Nifty is unlikely to breach its pattern low of the 10,275-mark, as also a possibility of runway upmove seems remote.
In all likelihood, it may continue to consolidate before it prepares to move past the 100-DMA, which rests at 10458. The levels of 10,450 and 10,485 will act as immediate resistance levels for the market. Supports come in at 10,365 and 10,320 zones.
The Relative Strength Index (RSI) on the daily chart is 47.4862. This indicator remains neutral showing no divergence against the price. The daily MACD stays bullish as it trades above its signal line. A long lower shadow occurred on the candles. However, in the present context and looking at the place it occurred, it remains insignificant to draw any conclusions for it.
The pattern analysis continues to show Nifty in the trading range. This range is formed with the lower range support of 10,275 and upper range extending itself 10,600 with the levels of 100-DMA lying exactly in between.
Overall, it is beyond doubt that the Nifty tested its 100-DMA and showed minor corrective tendencies after that. However, it clearly continues to exhibit the underlying positive bias.
Also, the broader market indices have continued to show resilience, while the sectors have consolidated.
We expect such rangebound consolidation to continue. However, we also expect that despite some amount of volatility and some continued consolidation, there are greater chances of Nifty moving past the 100-DMA mark closing in short time.
We continue to reiterate a cautious but positive outlook in the market for the immediate the short term.
STOCKS TO WATCH: Relatively better technical set up is observed in stocks like Fortis, DishTV, Vedanta, CG Power, Hexaware, Coffee Day Enterprises, Hindustan Zinc, Jamna Auto, Praj Industries, Grasim and Ultratech.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])