The Nifty opened on a mildly positive note and marked its high in the early minutes of the session after which it slipped into the negative territory. The markets stayed negative throughout the session, but mostly remained rangebound. The last hour and a half saw the weakness getting intensified and the index slipped lower, finally ending with a net loss of 124.10 points or 0.83 per cent.
The session was damaging from a technical perspective. Not only did the Nifty fail its earlier attempt to break out of the falling channel, but the index also slipped inside the falling channel again. This has reinforced the zone of 15,000-15,100 as a strong resistance zone once again. Now, unless the Nifty moves past this zone again, there are little chances of any sustainable up move happening in the market. Volatility rose, but only marginally. India VIX edged higher by 1.73% to 19.6525.
The weekly options expiry dominated the session. The maximum Call OI concentration at 15,000 level did not allow the Nifty to edge higher. Highest Put OI remained at 14,900, which saw the Index settling above this point.
Friday is likely to see the levels of 14,955 and 15,030 acting as resistance points. The supports come in at 14,850 and 14,780 levels.
The Relative Strength Index (RSI) on the daily chart is 54.13; it stays neutral and does not show any divergence against the price. The daily MACD is still bullish and above its signal line. Histogram, however, appears to be narrowing, showing deceleration of the momentum.
While having a look at the daily charts, the 50-DMA, which is at 14,734, is declining. Whereas the 100-DMA, which is currently at 14,630, is still rising. This means that the short-term momentum in the markets is fading.
Overall, the market behavior following the highly tentative and unconvincing breakout attempt has been on the much-anticipated lines. So long as Nifty is below the 15,000-15,100 zone, the markets will continue staying vulnerable to sell-offs at higher levels. We recommend avoiding aggressive purchases and approach the markets with a defensive and cautious outlook for the day.
Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected]