Indian equities once again saw a seesaw trade, as NSE benchmark Nifty swung nearly 225 points in either direction before ending the da y with a modest gain.
The market saw a shaky start on expected lines and continued to drift towards its fresh lows. From the morning lows, it saw recovery of nearly 100-odd points only to pare it again in the later half.
However, the last hour and half of trade saw similar recovery once again with Nifty rising over 150 points from its low. The index finally ended the day with a modest gain of 31.60 points or 0.31 per cent.
The recovery was not purely because of short covering as the Nifty ended up adding modest open interest. In the present circumstance, we expect a modestly positive and stable start on Tuesday. In any case, the Mondays low of 10,198 is now expected to act as a base and within that broad range, we expect the market to consolidate.
Tuesday is likely to see levels of 10,400 and 10,465 acting as immediate resistance area. Supports may come in at 10,280 and 10,200 zones.
The RSI on daily chart continues to trade in oversold area and stays neutral showing no divergence against the price.
A candle with a long lower shadow has emerged. Though it is not-so-classical long lower shadow, but it has certainly attempted to form a temporary base for the Nifty as it occurred when the index was oversold.
Overall, there are certain faint signs of the temporary bottom being formed and in the coming days, the 10,198 level is expected to act as support just in case if the Nifty consolidates in a given range while forming a bottom for itself.
The current oversold levels that the Nifty saw today along with the VIX are the ones that are not seen in past couple of years.
We will still see volatility refusing to go away and it will continue to dominate the sessions on Tuesday and on subsequent days as well.
However, we certainly see chances of the Nifty finding a base. Large number of shorts that were created over past couple of sessions continue to exist. We expect pullback attempts to continue and recommend cautiously positive view for Tuesday. Any additional positions more so on the short sides should be avoided.
STOCKS TO WATCH: We can expect resilience in event of a weak session from stocks of Tata Steel, Jubilant Food, MRF, PEL, Ashok Leyland, NCC, Maruti, Hero MotoCorp, Bajaj-Auto and DR Reddy Laboratories.
(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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