The stock market had yet another quiet session on Tuesday, as NSE benchmark Nifty opened positive and traded in a capped range before ending the day with a modest gain of 22.90 points or 0.22 per cent.
The volatility was large limited except for some small movements, as the session remained more stable than expected.
On Wednesday, market may consolidate a bit and take a breather. Nifty is very near to 50-DMA and 100-DMA levels, which remain in the close vicinity. We expect the market to take some breather at these levels. Both 50-DMA and 100-DMA levels stand at 10,438.
The Wednesdays session will see 10,440 and 10,520 acting as immediate resistance levels. Supports came in lower at 10,365 and 10,310 zones.
The Relative Strength Index (RSI) on the daily chart is 55.7665, and it has made yet another 14-period high, which is bullish. No divergence on RSI is seen against the price. The daily MACD continues to remain bullish, while trading above its signal line.
As per pattern analysis, the Nifty has broken out from a short-term falling trend. It continues to remain in the 27-month long upward rising channel, and the primary uptrend remains intact.
In the immediate short term, the Nifty is expected to encounter resistance at 50-DMA and 100-DMA levels on daily charts. Overall, we may once again see the market getting a relatively stable opening and a modestly positive start.
However, the market may encounter resistance at 50-DMA and 100-DMA, which converge at the same level of 10,438.
There are chances that the Nifty attempts to move past these levels and at the same time, faces some resistance at higher levels as well. We see some inevitable consolidation happening, and this may occur in a capped range and bring some volatility as well.
We recommend protecting profits at higher levels, and also make select purchases with each period of consolidation that the market offers.
STOCKS TO WATCH: Relatively buoyant technical set up was seen on counters like IDBI Bank, Bharti Airtel, Monnet Ispat, HDFC Standard Life, Graphite India, Bajaj Electricals, Ramco Cement, Jubilant Life Sciences and HEG.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])