Volatility was entirely absent during the day. This was evident as India VIX declined by 6.77 per cent to 20.4950.
Getty ImagesThursday's session will not only see expiry of the weekly options, but it will also be the last trading day of the week.
In the second day of recovery, the domestic equity market continued seeing short covering throughout the day and closed the session with a decent gain.
Headline index Nifty opened mildly in the negative, but soon crawled into the positive territory after initial minutes of the trade. As it marked the day’s low point in early minutes, Nifty stayed within a rising trajectory and continued marking incremental gains. Contrary to expectations, the trading range was narrower-than-expected throughout the day and the volatility remained virtually absent. As the index progressed towards the upper end of the broad
consolidation range, it finally ended putting on gains of 134.80 points or 1 per cent.
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Volatility was entirely absent during the day. This was evident as India VIX declined by 6.77 per cent to 20.4950. Following a violent revision to the mean during the session on Monday, Nifty ended up creating a broad trading range of 13,100-13,770 levels. As of now, the index is towards the upper end of this broad trading range.
Thursday's session will not only see expiry of the weekly options, but it will also be the last trading day of the week. Friday's session will be a trading holiday on account of Christmas. The levels of 13,645 and 13,690 will act as resistance points, while support will come in at 13,510 and 13,430 levels.
The Relative Strength Index (RSI) on the daily chart is 64.11; it is neutral and does not show any divergence against price. The daily MACD is bearish and remain below the Signal Line. Apart from a white body candle that emerged on the charts, no other important formation was observed.
The pattern analysis reveals a broad trading range getting created between 13,100-13,770 following Monday’s session. Going ahead from here, these levels may see a broad consolidation happening in between them. Presently, the index stands towards the upper end of this broad range after bouncing off from its short-term 20-DMA.
The previous session saw strong risk aversion among market participants. This was evident from the traditionally defensive stocks like pharma, consumption, IT, etc, putting up a resilient show and relatively outperforming the broader markets. This is likely to continue in the coming session as well. However, in the same breath, it is also
likely that we see some profit taking in the second half of the day. Given the long weekend coming up, participants turning cautious towards the end of the week cannot be ruled out. We recommend adopting a cautious approach and using all further pullbacks to protect profit 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.)
Part 2 of my Comments. The world is going through a lot of churning currently. It continuously works in favour of India & against China. Developped countries want a large stable country to replace China for a dependable supply chain for services, commodities & finished products that are competitively priced. India fills the bill ideally. This factor is not reflected well in the data used to generate the MACD curve developed on the Nifty graph will be available. This is likely to correct the misleading present day MACD curve for people thinking of investing in India. I believe in coming months, more new data reflecting FDI by FIIs, Govt spending on Infrastructure, Govt handling of Covid-19 much better than developped countries, availability of Covid vaccine in 2-3 months, improved performance by Indian economy properly will rectify the error reflected by present day MACD curve based on old data unable to reflect the positice factors that have come in to play in favour of Indian economy.
Vedavyasa H. Joshi1 hour ago
Part 1 of this comment. I feel that Nifty behavious is being governed by two strong factors simultaneously. Bearish trend suggested by MACD line below Nifty is based on convensional wisdom to play safe in a strong bulish market. However, bull run of Nifty is supported by several factors. International factors suggest the shifting of industries from China to other countries, particularly in to India. Secondly, India has managed Covid-19 disaster relatively better compared to USA, Europe & Australia. Hence, relative performance of Indian economy is better in recent days, encouraging some bullishness in Indian market. Lot of foreign exchange is moving in to India through FDI by FIIs, which gets invested to infuse fresh capital in to Indian industries. It will have a bull run continue for a relatively long time to come. It should be distinguished from bullishness caused by foreign money used in purchasing equity shares in Indian market. This is a hot money, which comes in easily & may also get out equally easily & quickly. The supervision of neconomy by Modi Govt is excellent & continually giving touches to govt policies to remove bottlenecks & favour foreign investments in India to work effectively. Govt spending in creation of infrastructure is also a factor encouraging bullishness. Several steps taken by Modi Govt have already worked well, which instills confidence in foreign & domestic investors in capital market, which helps bullish thoughts. Continued in Part 2.
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