The last session of calendar year 2017 ended on a buoyant note, as the benchmark Nifty50 index once again showed an inclination to re-attempt the previous failed breakout.

The Nifty ended with a gain of 52.80 points, or 0.50 per cent. As we usher in the New Year on Monday, we expect the market to start on a modestly positive note. In all likelihood, the upward move witnessed on Friday will spill over to Monday's session. We may see market extend its gains at least in the initial trade. In any case, the 10,490 level will remain critically important to watch out for.

The 10,550 and 10,610 levels will play out as immediate resistance for the Nifty50 on Monday, while supports will come in at 10,490 and 10,445.

The relative strength index or RSI on the daily chart stood at 66.8111. Though it does not show any failure swing, a bearish divergence was observed. The Nifty marked a fresh 14-period high while the RSI did not.

The daily MACD remained bullish while trading above its signal line. No significant formations were observed on the candles.

Pattern analysis showed the Nifty50 attempted a breakout earlier when it moved past the 10,490 mark. However, it suffered a throwback and gave up all of the gains from the breakout level. However, it has attempted to break out again and a confirmation to the same is awaited.

In any case, if the Nifty50 manages to extend its gains and continues with the upmove it witnessed on Friday, we can expect it to test the 10,600 and 10,630 levels in coming days. However, given the overall structure of the lead indicators on the daily as well as weekly Charts, we will still need to vigilantly protect profits at higher levels, as strong bouts of profit taking at higher levels cannot be ruled out.

A highly stock-specific approach with cautious optimism is advised for the day.

STOCKS TO WATCH:
Addition of long positions was seen in stocks like JP Associates, GMR Infra, HDIL, HCC, Tata Motors, TV18 Broadcast, SBI, Adani Power and Axis Bank.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)