Markets

Market outlook: Rally to continue but Nifty may face resistance at 10,360-10,380 level

Despite some volatility on Monday, the benchmark Nifty50 continued to show strength and the pullback continued, as the Index ended the day with a decent gain of 56.60 points or 0.55 per cent.

As of Monday’s close, the index has pulled back nearly 300-points. Not only the validity of the support of 100-DMA has been reinforced, the index shows potential to test the upper trend line of the intermediate channel that it has formed.

While we step into trade on Tuesday, we expect the market to open on a quiet to modestly positive note. We expect some morning gains coming in.

There is clear room for the market to continue its uptick, but the levels of 10,360-10,380 will be crucial to watch and the market may find some resistance there.

For Tuesday, the levels of 10,350 and 10,380 will play out as immediate resistance levels. Supports come in at 10,270 and 10,210 zones.

The Relative Strength Index (RSI) on the daily chart is 55.7629 and it continues to remain neutral against the price for today.

The daily MACD is still bearish and trading below its signal line, but it is sharply narrowing its trajectory.

On the candles, once again, a Rising Window occurred. This implies continuation of the uptrend that the market is currently witnessing.

The pattern analysis clearly depicts the market remaining in the intermediate falling channel that it has formed. This is a falling channel, an intermediate one, created after forming highs at 10,490.

Currently, the daily RSI is still seen making lower highs and it is yet to breach out of a formation. Until this happens, we can expect the market to face resistance at higher levels.

Going by the overall structure of the charts, we might see some more upmove coming in. We expect the pullback to continue, but in the same breath, we also expect the market to face resistance around 10,360-10,380 levels.

If the market faces resistance around these levels, then the current falling channel on the daily chart, which has emerged as an intermediate trend, will remain valid.

It would be crucial to see market going beyond these levels. We continue to recommend remaining highly stock specific. Picking right stocks and protecting profits at higher levels will remain crucial as we face Markets in coming days.

STOCKS TO WATCH: Long positions were seen being built in Bharti Airtel, Tata Power, Tata Global, ITC, DLF, ICICI Bank and M&M Financial Services. Also, a buoyant technical set up is observed in stocks like State Bank Of India, Bosch, HCC, Godrej Consumer and ACC.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

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