After three days of a robust upmove, Indian equity market took a breather as the NSE benchmark Nifty showed minor retracement post quiet opening on Tuesday. The market pared some gains as the Nifty ended the day 55.35 points or 0.52 per cent down.

As we approach Wednesday’s trade, we enter the penultimate day of expiry current derivative series, which happens to be one of the longest ones of the year.

We expect the trade to remain dominated with rollover activities and highly stock as well as sector specific action.

We once again expect a quiet opening to the Wednesday’s trade. There are chances that the market may continue to exhibit sluggish behaviour with consolidation continuing. Still it is likely to have limited downsides with the zones of 10,580-10,600 acting as important pattern supports. We expect the levels of 10,650 and 10,710 to act as immediate resistance for Nifty. Supports may come in at 10,600 and 10,550 zones.

The Relative Strength Index (RSI) on the daily chart is 51.8694, and it remains neutral showing no divergence against the price. The daily MACD still remains bearish. However, it is seen narrowing its trajectory and in absence of any major downsides, this indicator might see positive crossover.

On candles, a small engulfing bearish candle has occurred. Even though this candle is very small, it can temporarily stall an ongoing upmove. The pattern analysis show the major pattern supports of 10,580-10,600 may come into play once again.

In the event of a continued consolidation, these levels are expected to act as support in the immediate short term. Overall, in absence of any major triggers, we may see some consolidation continuing in the market. This activity is also likely to have very limited downsides, if any.

We expect the zones of 10,580-10,600 acting as important pattern supports. Any further dip may see the Nifty testing its 100-DMA level once again. We reiterate to continue to make select purchases while continuing to vigilantly protect profits at higher levels.

STOCKS TO WATCH: Long positions were added in stocks of Idea, JSW Steel, Adani Power, Tata Power, BHEL, NCC, Infosys, SAIL, Ashok Leyland, Dabur, M&M and Larsen & Toubro.

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