Markets

Market outlook: Undertone buoyant, but stay cautious

NEW DELHI: Market saw a weaker than expected opening on Tuesday and it spent the morning session in the negative territory while trading in a narrow 20-point range.

However, beginning afternoon, the Nifty index saw a surge from the morning low and led itself to a smart recovery.

It moved into the positive territory by late afternoon and ended with modest gains after recovering over 80-points from the lows of the day. The benchmark index ended the day with modest gains of 20.35 points (up 0.19 per cent).

With the Market ending near the high point of the day, we can fairly expect a flat to positive start to the trade on Wednesday. The session may see a positive bias, at least initially.

It will be important to protect profits at higher levels with each upward move of the market.

Nifty may see 10,938 and 10,990 playing out as resistances on Wednesday.

Key supports come in at 10,850 and 10,800. The Relative Strength Index (RSI) on the Daily Chart is 59.7561. It has again shown a bearish divergence on the Charts as the Nifty marked a 14-period high, but the RSI did not.

The Daily MACD stays bullish as it trades above its signal line.

On the candles, a white body emerged which remains insignificant, given the present structure of the charts, and merely suggests a likelihood of the continuation of the uptrend.

The pattern analysis of the charts shows that Nifty has managed to move past the falling trend line resistance.

This trend line emerges from the high of 11,760 and subsequently joins the lower tops.

Nifty may extend its gains at least in the initial trade on Wednesday. Even a small extension of the upward move will take Nifty to a pattern resistance in the form of a minor double top and its 100-DMA which is presently at 10,938. They remain in the proximity of each other.

It is recommended that one should use the upward moves to protect profits at higher levels. Although shorts should be avoided as the structure of the market remains inherently buoyant.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

Original Article

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