Fridays session continued to see the market consolidating once again. After opening on a modestly positive note, the NSE benchmark Nifty pared its opening gains and drifted into the red. Though it remained in a capped range, it ended with a small loss of 25.65 points or 0.22 per cent.
On Monday, expect the market to make a flat to modestly positive start. Also, at the same time, we also see the market continuing to consolidate. The upsides are likely to remain capped with limited upsides. The Nifty is likely to continue to trade in a broad range with each upside likely to meet with corrective bouts.
The levels of 11,620 and 11,650 is likely to act as immediate technical resistance area. Supports may come in lower at 11,510 and 11,465 zones.
The Relative Strength Index (RSI) on the daily chart is 68.4064. It remains neutral showing no divergence against the price. RSI has moved below from a topping formation and it is bearish. It also continues to resist within a pattern. The daily MACD stays bearish while it trades below its signal line. No significant formations were seen on the candles.
By looking at pattern analysis, it becomes fairly evident that though Nifty has continued with its upmove while marking marginal highs, it is now visibly over extended on the daily charts as well as higher time frame charts.
In all likelihood, the previous immediate high of 11,620 may act as a minor temporary top for the market.
We expect this level to offer resistance in the immediate short term and each higher move will continue to keep Nifty vulnerable to profit taking bouts from higher levels.
We recommend focussing on protecting profits at higher levels. Fresh positions should be initiated on highly selective basis.
We strongly recommend refraining from making bling purchases while attempting to chase the momentum. Though the uptrend remains largely intact but short-term corrective moves resulting in to broad rangebound consolidation cannot be ruled out. Cautious view is advised for the day.
STOCKS TO WATCH: Short positions were seen being added in stocks like Adani Power, South Indian Bank, Idea, ICICI Bank, Bharti Airtel, TATA Motors, Ashok Leyland, Sun Pharma, CG Power and TV18 Broadcast.
(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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