INSUBCONTINENT EXCLUSIVE:
An overdue technical pullback continued to evade the oversold domestic equity market, as the benchmark Nifty50 extended its losses for yet
After opening on a negative note, the market had recovered nearly all its gains by mid-session
However, the second half saw the recovery got pared again.
Subsequently, Nifty ended the day losing 94.90 points, or 0.94 per cent
Many of the critical support levels were tested and mildly violated during that session.
The 10,026 level is the 100-week moving average and
also a serious pattern support on the higher timeframe charts
market trajectory from there on would again be extremely important to watch
With the downsides that we witnessed recently, the market has shifted its resistance levels lower
In the event of a pullback, Nifty would face resistance in the 10,250-10,275 zone, instead of 10,400, which would come later
On the lower side, the next major double bottom support exists in the 9,950-9,900 area.
The RSI on the daily chart stood at 30.1917
It remains nearly oversold and shows a bullish divergence against price
The daily MACD remains bearish even as it trades below its signal line
No significant formations were observed on the candles.
Another important factor to take note of is that volatility has increased immensely
over the past couple of weeks
This has resulted into the Bollinger bands getting nearly 84 per cent wider than normal
This shows it is high time for volatility should drop, and the market to return in a normal trading range.
We recommend staying away from
taking any major directional call
Fresh shorts should be avoided, and purchases should be kept selective and limited to certain sectors and stocks which are rotating
favourably to ensure relative outperformance
Maintaining a cautious view on the market is advised for the day.
Stocks to watch:We saw significant shorts creation in YES Bank, Equitas,
ICICI Bank, Bhel, ONGC, State Bank of India, Tata Motors, Tata Motors DVR, ITC and Motherson Sumi.
(Milan Vaishnav, CMT, MSTA is Consultant
Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
