The equity market continued with its upmove on Thursday, as the Nifty50 ended yet another session with solid gains. The index settled 74.90 points or 0.68% higher. However, the Nifty also came off nearly 50 points from the high point of the day.
Thursdays behaviour of the market points towards likely consolidation at the current levels despite undercurrent remaining buoyant.
Friday is likely to see a flat and quiet start to the trade. We expect the levels of 11,080 posing as mild resistance before market moves towards its lifetime highs again.
The levels of 11,080 and 11,170 will now act as immediate resistance area for the Nifty. Supports may come in at 10,975 and 10,910 zones.
The Relative Strength Index (RSI) on the daily chart is 66.8869. It has marked a fresh 14-period high, which is bullish. The daily MACD stays bullish while trading above its signal line. On the charts, a candle with a long upper shadow emerged. It has significance, as it occurred during an uptrend.
A rising window also occurred on the candles. This usually implies continuation of the upmove, but in the present context and scenario, it will not be a surprise if we see market stalling its upmove and consolidate near the current levels.
If we look at pattern analysis, we see the Nifty approaching its lifetime high mark of 11,170. However, as it approaches this level, it is likely to face some overhead resistance. We expect Nifty to consolidate at current and higher levels.
Overall, it is more than evident that the Nifty has broken out from a large symmetrical triangle and is moving towards lifetime high levels of 11,170.
In the present technical picture, there are high chances that the index will consolidate at higher levels. Also, as it approaches the lifetime high, the said level is also likely to act as its overhead resistance.
We recommend remaining highly vigilant at current levels and protect profits. Nifty has ended above the upper Bollinger band. Though this may translate into continuation of upmove, but temporary pullback inside the band cannot be ruled out.
Cautious view with emphasis on profit protection at higher levels is advised for the day.
STOCKS TO WATCH: Resilient technical setup is seen in stocks like TCS, Fortis, HDFC, sintex, Crompton Greaves consumer, AU Small Finance, Speciality Restaurants, VIP Industries, Icici Lombard and PI Industries.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at firstname.lastname@example.org)