Equity markets on Wednesday traded precisely on analysed lines as it continued to resist to the 8,690-8,700 zones for the entire trading day before ending the day with marginal losses. On Thursday, the analysis remains more or less on similar lines once again. We will see Nifty 50 index continuing to resist at 8,690-8,710 zones and these level will continue to pose some formidable resistance before Nifty resumes its up move. Volatility and choppiness will continue to remain ingrained in the markets.
For Thursday, the levels of 8,690-8,710 and 8,755 will act as resistance for the markets. The supports will come in at 8,620 and 8,575 levels. The RSI—Relative Strength Index on the Daily Chart is 48.01 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still remains Bearish as it trades below its signal line.
On the derivatives front, the Nifty October futures have shed yet another 4.50 lakh shares or 2.45 per cent in Open Interest. This indicates continuing offloading of long positions in the system. Coming to pattern analysis, the neckline levels of descending triangle pattern that the Markets breached on the downside are acting as resistance in the times of pullback. The zones of 8690-8710 will continue to resist until the Nifty sees a successful resumption of up move. Until this happens we will continue to see Nifty oscillating in a broad trading range with some amount of volatility ingrained in it. Overall, we will not see any meaningful up move only after Nifty moves past the levels of 8,755-8,775 zones which will take it out of the falling channel it has formed. Until this happens, we will see Nifty continuing to remain vulnerable to selling bouts from higher levels. Though stock specific outperformance will continue, we continue to reiterate our cautious view on the Markets today.
(The author is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services)