While trading perfectly on analysed lines, domestic equity markets consolidated after 3 days of gains and ended the day with minor losses after coming off from its intraday highs. The levels of 8820 mentioned on Thursday acted as resistance intraday. On Friday, we once again expect the markets may continue to consolidate its gains and trade in a capped range. The session is expected to remain range bound.

For Friday, the levels of 8,820 and 8,850 will continue to act as immediate resistance levels for the markets. The supports will continue to exist at 8,750 and 8,720 levels. The RSI – Relative Strength Index on the Daily Chart is 63.8215 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bullish as it trades above its signal line. On the derivative front, the NIFTY September futures have added over 6.10 lakh shares or 1.82 per cent in open interest. Coming to pattern analysis, markets have continued to exhibit a lot of strength as it showed no decline but consolidated after of 215-odd point of gains. This strength was evident as the markets showed very limited declines and remained in a very narrow and capped range. Nifty have confirmed its breakout that occurred above the levels of 8,728, an immediate top that was formed in the first week of August. Having said this, it becomes important to note that the undercurrent in the equity markets continues to remain buoyant and the markets will continue to see some consolidation in the immediate term while exhibiting lot of internal strength. We expect such consolidation to occur in the form of intermittent selling bouts from higher levels but the overall decline is likely to remain limited.

Overall, in event of any decline, the level of 8,700-8,728 will continue to lend immediate support to the markets. The expected range bound movement for the markets will in fact lay further strength for the markets to continue with its up move in coming days. Any declines or intermittent intraday selling bouts should be continued to be used to make fresh purchases. As mentioned on Thursday, sectoral shift and outperformance will continue and we will see Bank Nifty, PSU Bank, Energy and Auto stocks outperforming the broader markets and providing good entry points. However, we may see some caution reigning in as well with Monday being a Holiday on account of Ganesh Chaturthi.

(The author is Milan Vaishnav, CMT, Consultant Technical Analyst at Gemstone Equity Research & Advisory Services)