Trade Setup: Staying above 15K crucial for Nifty; stick to defensive stocks
Headline index Nifty had a secure begin to the day. It opened optimistic and after spending the preliminary morning commerce in a capped vary, it acquired stronger because the day progressed. However, the late afternoon commerce noticed a wave of corrective transfer that noticed the market paring all its positive factors. From its excessive level, Nifty got here off practically 160 factors and went on to slip within the unfavourable territory. Following a really minor pullback, the headline index closed the day flat with a negligible lack of 6.50 factors or 0.04 per cent.
In the earlier technical word, we talked about in regards to the cumulative advance decline, i.e. the market breadth not confirming with the latest up transfer. This was additionally mirrored in a unfavourable AD ratio. Also, the approaching off from the excessive level was due to an extended unwinding from larger ranges. This was evident from the futures OI which declined together with the decline out there. Options information confirmed a blended image with the degrees of 15,200 seeing excessive quantity of each Call and Put writing. The market is probably going to proceed to keep in a broad vary.
Volatility index India VIX elevated marginally because it rose 1.30 per cent to 24.2700. Though a secure begin to the day is anticipated, staying above 15,000 might be crucial to keep away from any weak point from creeping in additional. The ranges of 15,200 and 15,235 will act as resistance factors, whereas assist will are available at 15,000 and 14,910 ranges.
The each day RSI stood at 68.22. Just like the previous few classes, it continued to present a bearish divergence in opposition to worth. The each day MACD was bullish because it remained above its Signal Line. A Spinning Top occurred on the charts. With an extended higher shadow, the candle appears notably bearish. It has the potential to disrupt the current rally, except Nifty strikes previous 15,200.
High beta stocks like monetary companies, auto, and different midcaps continued to present indicators of fatigue. This is the time when any up strikes must be used to shield earnings at present ranges. A robust sectoral rotation was seen occurring in favour of defensive stocks, and this phenomenon is probably going to proceed over the approaching days. We suggest approaching the market cautiously whereas making choose purchases in defensive stocks. Lay extra emphasis on making exit at larger or present ranges from excessive beta names as a substitute of chasing them.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founding father of Gemstone Equity Research & Advisory Services, Vadodara. He might be reached at [email protected])
