The domestic equity market continued to bounce and stepped into the new week on a buoyant note. While the market remained within a capped range, the benchmark Nifty50 ended Mondays session with a gain of 47.05 points, or 0.44 per cent. Tuesday was a trading holiday on account of Maharashtra Day.
Speaking from a global perspective, Tuesday was largely uneventful. On Monday, US market has closed with a modest loss, while on Tuesday European markets traded with modest gains.
Going into Wednesdays session, Dalal Street should see a quiet start and the market may show modest strength in early trade with the possibility of some consolidation.
The 10,750 and 10,805 levels should act as immediate resistance for the Nifty50, while supports should come in at 10,675 and 10,620 levels.
The relative strength index or RSI on the daily chart stood at 69.97 and it has marked yet another 14-period high. This indicates continuation of the buoyant undercurrent. The RSI remains neutral, showing no divergence from price. The daily MACD continues to be bullish, above its signal line. On the candles, a white body has occurred. This implies continuation of the ongoing bounce. Apart from this, no significant formations were observed on the candles.
Pattern analysis suggests the Nifty has tested the upper range of the rectangle formation for sometime before breaking out. Though this remains prone to some throwbacks, a breakout above the 10,500 mark is a distinct possibility.
Overall, there are no major triggers that can influence any sharp movement in the market on either side on Wednesday. The Nifty50 may attempt to inch higher. However, the market is very close to the overbought territory and remains prone to some consolidation at higher levels.
The Bollinger bands are getting wider-than-its normal range. Also, volatility has been at its lowest levels in the recent past. All this may push the market into consolidation and keep it within a range.
Stock-specific actions will dominate the session. Investors should remain stock specific and guard profits at higher levels.
STOCKS TO WATCH:
Good technical setup was observed in stocks like First Source, IRB Infra, Vedanta, Nalco, Canara Bank, IndianOil, Jet Airways, Tata Steel, NCC, CG Power and BHEL.
(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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