The domestic equity market headed nowhere as Nifty traded directionless for the entire day and ended with a modest loss. The 50-pack saw a negative opening, oscillated in a range all through the morning, and then slipped into the positive territory.
At one point, the index tested the day’s high just above the psychological 10,000 mark. However, geopolitical tensions from the standoff between India and China dampened sentiment in an otherwise technically vulnerable market. Nifty came off the high point and eventually closed with a net loss of 32.85 points, or 0.33 per cent.
On Thursday, expiry of weekly options is going to dominate the proceedings. That said, strike prices above the 10,000 market currently have the highest concentration of Call open interest, which shifted lower from the 10,200 mark. Unless Nifty sees a tactical shift, it is unlikely to move past the 10,000 level even if there is an up-move.
The primary setup remains bearish and any move on the upside will make Nifty vulnerable to selloff at higher levels. Volatility index INDIA VIX slowly extended its rise to 33.3550 by adding 1.18%.
On Thursday, the 9,935 and 10,000 levels are likely to act as key resistance points for Nifty while supports should come in lower at 9,810 and 9,705 levels.
The Relative Strength Index (RSI) stood at 55.94 on the daily chart. It remains neutral and does not show any divergence against price. The daily MACD has slipped below the signal line and turned bearish. A Doji occurred on the candles.
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Within a relatively weaker setup, such a candle formation can infuse weakness and can potentially reverse the trend on the negative side.
All in all, Nifty faces more than once hurdles that can push it on the negative side. On one hand, Nifty is facing a risk from any increase in geopolitical tensions, while on the other hand, the short-term technical setup remains weak. Apart from this, weekly options expiry will continue to dominate the trend and also infuse some volatility in the session.
Given such shaky technical juncture, don’t expect any sustainable rise unless Nifty moves past the 100 DMA, which now stands at 10,132. We reiterate having a cautious outlook for Nifty.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])
