The domestic equity market had a rangebound session on Thursday even as the August derivative series expired, and the indices ended on a flat note with marginal gains. Nifty opened positive and moved higher, but marked an intraday high in the morning trade. After that, the second half of the session was spent in a very narrow range, but on a declining trajectory.
While coming off its highs, Nifty pared all the gains by the end of the session. In a session that was governed also by the expiry of weekly options, the headline index ended with negligible gains of 9.65 points, or 0.08 per cent.
Thursday’s session remained technically important. The 11,600-level held maximum concentration of Call Open Interest throughout the session, which ensured that Nifty does not move past that level by close. Supports, which existed earlier at 11,500 level in form of highest Put OI shifted higher to 11,550 level. This made Nifty stay in a capped range in the afternoon trade. Volatility declined as INDIA VIX came off 2.16 per cent to 18.8850.
Friday’s session may see a tepid start to the session with the 11,600 and 11,635 levels acting as key resistance, while supports will come in at 11,500 and 11,410 levels.
The Relative Strength Index, or RSI, on the daily chart stood at 68.39; it remains neutral and does not show any divergence against price. The daily MACD remains bullish as it trades above the signal line. A black body occurred on the candles; but no other formation was noticed.
Going by pattern analysis, though Nifty has broken out above 11,430 level, which was the double top resistance, and has also filled the gap that existed in the 11,430-11,500 zone, mild signs of fatigue are getting visible again. However, the index remains well within the upward rising channel.
ET CONTRIBUTORSThere are chances that Nifty may see some consolidation and is expected to take some breather before moving past the 11,600 level again. If that happens soon, we can expect Nifty to trade in the overbought zone. That being said, the banking stocks relatively outperformed the broader market on the expected lines. Going ahead, we hope to see FMCG and consumption stocks wake up from slumber. We recommend shifting focus to defensive stocks as we move forward.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
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August 28, 2020 at 12:03AM
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Trade Setup: FMCG & consumption stocks may wake up; stay defensive - Economic Times
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