Market outlook: Nifty likely to continue pullback; 9,915 is key
, ET CONTRIBUTORS|
Updated: Oct 04, 2017, 08.44 AM IST
Indian equities had a buoyant session on Tuesday on the expected lines as the benchmark Nifty50 ended the day with net gains of 70.90 points, or 0.72 per cent. Though the session remained extremely range-bound, the positive point was that it maintained the gains throughout the day.
Going into Wednesday, we expect a positive start and the market is likely to continue the pullback. The important point to note was the Tuesday’s intraday high. The 9,895-9,915 zone is where the market faced resistance and this is the area of the trend line of the rising channel that the market breached on the downside.
Going ahead, this is likely to act as resistance and it would be important for the market to move past this area.
The 9,915 and 9,940 levels will act as immediate resistance for the market. Supports come in at 9,820 and 9,775 levels.
The Relative Strength Index or RSI on the daily chart stood at 44.6515 and it remains neutral showing no divergence against the price. The daily MACD is bearish as it trades below the signal line. No significant formation was observed on the candles.
Going by pattern analysis, the Nifty50 has breached the upward rising channel on the downside. While pulling back, it has faced resistance at the rising trend line of that channel. So, what was support earlier is now acting as a resistance.
As mentioned above, it would be important for the market to move past the 9,895-9,915 zone in order to go back into the upward rising channel. Going on from there, the Nifty50 will have 50-DMA at 9,945 to tackle with.
Given all this, the market will continue to trade on positive lines with outright outperformance in select pockets. We expect the pullback to continue. Unless the critical level of 9,685 is broken, all downsides should be utilised to make select purchases.
STOCKS TO WATCH:
Buoyant setup was observed on the counters like LIC Housing, HDFC, Axis Bank, JK Tyre, CESC, Havells and PVR. These stocks are likely to trade with an upward bias.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
Going into Wednesday, we expect a positive start and the market is likely to continue the pullback. The important point to note was the Tuesday’s intraday high. The 9,895-9,915 zone is where the market faced resistance and this is the area of the trend line of the rising channel that the market breached on the downside.
Going ahead, this is likely to act as resistance and it would be important for the market to move past this area.
The 9,915 and 9,940 levels will act as immediate resistance for the market. Supports come in at 9,820 and 9,775 levels.
The Relative Strength Index or RSI on the daily chart stood at 44.6515 and it remains neutral showing no divergence against the price. The daily MACD is bearish as it trades below the signal line. No significant formation was observed on the candles.
Going by pattern analysis, the Nifty50 has breached the upward rising channel on the downside. While pulling back, it has faced resistance at the rising trend line of that channel. So, what was support earlier is now acting as a resistance.
As mentioned above, it would be important for the market to move past the 9,895-9,915 zone in order to go back into the upward rising channel. Going on from there, the Nifty50 will have 50-DMA at 9,945 to tackle with.
Given all this, the market will continue to trade on positive lines with outright outperformance in select pockets. We expect the pullback to continue. Unless the critical level of 9,685 is broken, all downsides should be utilised to make select purchases.
STOCKS TO WATCH:
Buoyant setup was observed on the counters like LIC Housing, HDFC, Axis Bank, JK Tyre, CESC, Havells and PVR. These stocks are likely to trade with an upward bias.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)
