Nifty is likely to face key resistance at the 11,710 and 11,735 levels, while supports will come in at 11,580 and 11,515 levels. The RSI on the daily chart stood at 49.21; it remains neutral and does not show any divergence against the price.
In yet another volatile session, Nifty on Monday wildly swung on either side before ending the day with mild gains, thanks mainly to gains in financial stocks. The market saw a stable and modestly positive start, but soon slipped into the negative territory within the first hour of trade and marked the low point of the day.
Gradually, Nifty recovered during the rest of the session, though the market moved in a defined range for most part of the day. The headline index finally entered the positive territory and hit the high point for the day in the last hour of trade. But just before close, the index pared much of the gains to finally end with a modest rise of 26.75 points, or 0.23 per cent.
Global markets are likely to stay volatile throughout the week owing to the US elections, and the Indian market is unlikely to stay insulated from such election-induced volatility.
However, from a standalone look at the technical chart, Monday's was the second session when Nifty breached the broad trading range and recovered after taking support at the 50-DMA, which currently stands at 11,554. This makes the 50-DMA a crucial point to watch in the coming few days. Volatility continued to edge higher as India VIX rose 1.85 per cent to 25.2100.
Nifty is likely to face key resistance at the 11,710 and 11,735 levels, while supports will come in at 11,580 and 11,515 levels. The RSI on the daily chart stood at 49.21; it remains neutral and does not show any divergence against the price.
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The daily MACD is bearish and remains below the signal line. A Spinning Top pattern also occurred. This indicated a session with little price difference between the opening and closing price points and signalled indecisiveness among the market participants. This can result in bearishness if the pattern is not resolved in the next trading session.
Pattern analysis showed Nifty twice violated the lower edge of the large trading zone that has been created amid range-bound trade two weeks back. The 11,600-11,650 zone will be crucial to watch and any serious violation is likely to trigger incremental weakness.
The analysis for Tuesday remains more or less on the similar lines, as the broader technical patterns largely remain unchanged. The previous two sessions saw the formation of almost parallel bars. Given the current technical setup, it will be crucial to watch Nifty’s behaviour vis-à-vis the 50-DMA. This level currently stands at 11,554 and any slippage below this mark will invite incremental weakness.
On the other hand, the market may stay deceptive on the upside and may remain prone to profit taking at higher levels.
(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)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
There are quite a few aspects relating to reliance which the average investor on the street is not aware off. Its ROCE is pretty low and details of the ROCE of the various entities are not revealed since there is no disclosure requirement. The recent bout of investments (and any acquisition is made at very high premium to value) have created an unwarranted hype on the stock despite these investments not translating intoa gain for the shareholders. The official announcement is that the funds would be utilized to retire debt but the cost of replacement, alternatives or its impact on the WACC was not discussed even by professional fund managers. The debt could have been replaced by a cheaper long term instrument or even bya deep discount bond while currently it has replaced by equity whose cost is undoubtedly more than debt. The details of the investment made by Google etc and the manner of utilization of the funds has not been made public and one can only hope that it will be used as Capex for Jio. Re Retail – the company has still not come out with its reasoning behind the argument that its not bound by the decision of the arbitrator and nota single analyst has even investigated the agreement of Future and Amazon and the logic of Reliance. All this points out to a clear lack of transparency but at the ned of the day all the analysts have missed the biggest price driver – the development of a 5G network with Qualcomm.
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