By Milan Vaishnav, CMT, MSTA
The domestic equity market had a disappointing session on Thursday, as it opened on a mildly positive note but spent most part of the day in an extremely narrow range.
The index slipped further in the last hour of trade and ended the day with modest loss of 30.95 points, or 0.29 per cent.
The session remained without any directional bias, but Nifty continued its ongoing pattern and faced resistance at its pattern resistance zone. As we approach Fridays session, we once again expect a quiet start to the day, but the pattern resistance zone between 10,820 and 10,850 levels are likely to remain in force. Nifty has to rule out any exceptional move unless these levels are breached on the upside.
The 10,810-10,830 zone is likely to be the immediate resistance zone for the market, while supports should come in between 10,720 and 10,660 levels.
The Relative Strength Index or RSI on the daily chart stood at 52.1682 and it remained neutral showing no divergence against the price. The daily MACD remained bearish, as it traded below the signal line. On the charts, a big black candle occurred. In the current context, it remains important, as it occurred near the pattern resistance area.
This reinforces the credibility of the pattern resistance that Nifty faces. Pattern analysis showed Nifty continued to remain in a broad symmetrical triangle pattern and has been moving towards its apex with each passing day. On the upside, the index continued to face resistance at the falling trend line, which joins the high of 11,171 to the subsequent falling tops.
Overall, the index is still not out of the woods even though it continued to move in a narrow range. It would be critically important for the Nifty to resolve the current pattern with a move on either side. Unless this happens, the 10,820-10,850 zone will continue to remain critical and an important pattern resistance area for the index.
Unless a resolution to this pattern is achieved, investors should remain moderate on overall exposures and continue to vigilantly guard profits at higher levels.
STOCKS TO WATCH:
Selective longs were seen being added in ICICI Bank, Tata Motors, HDFC, Reliance Industries, Sun TV, Infosys, BHEL, IndianOil, HPCL, Berger Paint, CG Power, Tata Power, Arvind, LIC Housing, Engineers India, Castrol and Zee Entertainment.
(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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