NEW DELHI: Tuesdays session saw the markets trading in a capped range and showing all signs of a probable consolidation. Though a positive bias came to the fore, the upmoves continued to remain limited. The benchmark Nifty50 ended the day logging a modest gain of 19.15 points, or 0.17 per cent. While getting mildly overbought on the Daily Chart as well, the markets continued to overextend itself on higher timeframe charts as well.
We will approach Thursdays trade after a trading holiday and we will have world markets to catch up with. The global environment remains stable and this may once again lead us to see a stable opening on Thursday.
However, the analysis continues to remain on similar lines and we recommend a high degree of caution as we now deal with and chase the marginal upmoves the markets are giving while remaining overextended.
The Thursdays trade is likely to see the levels of 11,585 and 11,620 acting as immediate resistance levels. Supports come in lower at 11,540 and 11,470 zones.
The Relative Strength Index – RSI on the Daily Charts is 70.5727 and now trades in mildly overbought territory. RSI continues to show bearish divergence against the price. Daily MACD too remains bearish as it trades below its signal line.
On the Candles, a spinning top occurred. It also resembled a not-so-classic long lower shadow, but in any case, it may potentially halt the current upmove. However, this needs confirmation on the following bar.
This is the time when we continue to chase the momentum on the higher side, but do it now with great degree of caution. Blind chase of momentum may see traders getting caught unawares if a corrective bout is encountered at higher levels.
The Nifty, despite remaining secularly bullish, also stares at a possible minor corrective bout at higher levels. We recommend keeping positions extremely selective and moderate and guard profits vigilantly at higher levels. Though shorts may be avoided and dips, if any, may be used for making purchases, approach to the markets should be kept highly stock specific and selective. Cautious view is advised for the day.
Stocks to watch
Long positions were seen being built in stocks like PEL, Ashok Leyland, ICICI Bank, Federal Bank, CG Power, JSW Steel, Reliance, Sun Pharma, Axis Bank, India Cement, Coal India and ITC.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])
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