Monday’s session remained extremely range bound as the Nifty 50 index moved in a narrow 20-odd points for the day while the markets ended the day with modest gains. On Tuesday, our analysis remains on similar lines that of yesterday as the markets are likely to continue to positively consolidate. The global markets too have attempted to stabilise around their key supports and this likely to positively aid the consolidation of domestic markets. BoJ, which is likely to make some critical changes with regard to Quantitative Easing and the Federal Reserve, which will cast its interest rate decision will solicit some reaction from the markets as well.
For Tuesday, the levels of 8,840 and 8,895 will act as immediate resistance levels and the supports are likely to come in at 8,760 and 8,730 levels. The RSI—Relative Strength Index on the daily chart is 56.8151 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bearish while it trades above its signal line.
On the derivative front, the NIFTY September futures have added over 2.88 lakh shares or 0.90 per cent in open interest. Pattern analysis clearly suggests that the markets are currently undergoing range bound consolidation and the undercurrent remains buoyant. After making a top at 8,968 levels, the markets achieved 100 per cent throwback to 8,700-8,730 levels and it took support there. These levels continue to act as immediate major support and so long as it trades above this critical support zone, it is laying groundwork for a further up move. However, in coming days, it should be no surprise if we see capped trading range and some positive consolidation. All and all, the session should be approached with positive bias. Though some amount of volatility cannot be ruled out, all dips should be continued to be utilised to make selective purchases while avoiding shorts.
Sectoral out-performance will continue and stock specific action will dominate coming sessions. Overall, positive outlook is advised for the day.
(The author is CMT, Consultant Technical Analyst at Gemstone Equity Research & Advisory Services)