The domestic equity market saw a modest technical pullback on Wednesday, as the benchmark Nifty index ended the day with net gains of 61.60 points, or 0.58 per cent.
A mildly positive start to the trade strengthened further and this resulted in the market pulling back and ending with gains.
The upward move was led by short covering, but it was important as the Nifty held on to its short-term support at its 20-DMA.We expect this mild uptick to percolate down to Thursdays trade as well.
A modestly positive and quiet opening is expected.
However, it should not be ignored that Nifty continues to be in a broad symmetrical triangle formation and it will continue to face pattern resistance of the falling trend line joining the lower tops.On Thursday, Nifty is likely to see the 10,810 and 10,840 levels play out as important resistance while support would come in at 10,750 and 10,710.The Relative Strength Index or RSI on the daily chart stood at 54.6358 and it remained neutral showing no divergence against price.
The daily MACD has reported a negative crossover and it turned bearish even as it traded below its signal line.
On the candles, a pattern resembling a Bullish Harami has emerged, which us significant as it has occurred after a corrective move.
Also it has arisen from a combination of black/white candle with the white body remaining completely encompassed by the preceding black body.Pattern analysis showed Nifty continues to be in a broad symmetrical triangle pattern and remains susceptible to resistance coming in from the falling trend line that which joins subsequent lower tops from 11,170 level.As of Wednesday, Nifty validated its short-term support area of the 20-DMA and this was followed by the 50-DMA, which remains in close vicinity.
We expect the coming session to be dominated by stock-specific activities.
As Nifty continues a large pattern formation, it would be prudent to keep protecting profits at higher levels until Nifty resolves the present pattern formation on either side.
While remaining highly stock specific, a cautious view is advised for the day.STOCKS TO WATCH:Relative resilient technical setups were observed in stocks like CG Power, Adani Power, Yes Bank, Tata Motors, Tata Steel, RIL, Reliance Capital, NHPC, Exide, Tata Power and MM Financial.(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara.
He can be reached at milan.vaishnav@equityresearch.asia)