NEW DELHI: Wednesdays session saw the Indian equities outperforming and the market extending gains.
The session saw a positive opening and the NSE Nifty inched higher during the day.
It came off a bit from the high point of the day, but the index still ended the session on a positive note, gaining 58.60 points (+0.54%).
In the process, the index ended slightly above the 100-DMA which is presently at 10,937.
The overall inherent bias of the markets, in general, remains buoyant. However, while taking an extremely short-term view, Nifty presently remains in an uncomfortable technical structure.
The key index has pulled back over 600 points in the last six trading sessions from the lows that were witnessed on December 11.
Presently, it remains slightly overstretched on the short-term charts and some consolidation from higher levels cannot be ruled out.
Thursday may see the levels of 10,990 and 11,075 posing as resistances for the Nifty. There are key supports for the index at 10,938 and 10,880.
The range for the market may remain narrow in the coming session. The Relative Strength Index (RSI) on the Daily chart is 61.9008 which continues to show a negative divergence against the price.
The Daily MACD stays bullish as it trades above its signal line.
Todays gap created a rising window on the candles. This potentially means the continuation of upward movement.
However, given the present technical structure on the charts, this formation should not be read in isolation.
Overall, taking a holistic view on the market, it is time to get cautious while taking a short-term view.
Despite buoyant undercurrent, the present structure on the charts is slightly overstretched and this has now made the market more vulnerable to consolidation from higher levels.
A strong sector rotation is happening in the market, so instead of blindly chasing the upward movement, judicious picking of the stocks that are favorably rotating should be done.
Protecting profits at higher levels is recommended and a cautious view is advised for Thursdays session.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at email@example.com)