Trade setup: Nifty50 has limited upside, likely to remain sluggish
The domestic stock market witnessed unwinding and underwent classical correction on Wednesday, as NSE Nifty fell over 110 points from the days high to end 0.75 per cent lower.
We expect a flat to negative start on Thursday, and the session may remain volatile due to weekly index options expiry. However, compared with the past several days, volatility may come down a bit. Moreover, India VIX may also won t move much even if market extends fall.
Thursdays session is set to see 11,630 and 11,690 levels act as resistance points. Supports may come in lower at 11,550 and 11,480.
The Relative Strength Index (RSI) on the daily chart stood at 59.5299. The RSI has marked a fresh 14-period low, which is bearish, showing a bearish divergence against the price.
The daily MACD stayed bearish as it traded below its signal line. A black body appeared on the candles, and apart from this no major formations were observed.
The pattern analysis showed a double top getting confirmed at the 11,760 level. This is a major resistance for Nifty, as it took seven months to get formed. Also, the index retraced from those levels again.
Speaking on broader terms, the present corrective behaviour of the market is likely to persist for some more time. We do not expect any major upmove until 11,760 is taken out comprehensively.