Nifty50 may see some pullback, but keep overall exposure light
In our previous note, we had mentioned about confirmation of the levels of 10,410 becoming a temporary lower top for the market.
Thursday’s expiry session saw the volatility on expected lines, but the session remained weaker than expected. The benchmark Nifty50 ended the day losing 134.75 points or 1.30 per cent after failing to sustain a feeble attempt to recovery. While we step in to the December series, Thursday’s session was technically significant.
We may see a flat to mildly positive start on Friday, but that thing aside, the levels of 10,410 has been confirmed as a lower top for the market after 10,490.
Friday’s trade may see the levels of 10,180 and 10,150 playing out as immediate supports for the markets. Upsides may find resistance at 10,250 and 10,310 zones.
The Relative Strength Index on the daily chart is 44.9564 and remains neutral while showing no divergence to the price. The daily MACD has reported a negative crossover, and it is now bearish while trading once again below its signal line.
A Big Black Candle that emerged on Thursday reaffirmed the credibility of the resistance levels and further it is also accompanied with a “Falling Window” formation.
This results after a weak / black candle, which emerges with a gap on the downside and this also usually results into continuation of a weak trend.
The pattern analysis confirms the levels of 10,410 as a lower top for the market after the levels of 10,490 as evident from the chart.
Overall, there are chances that the Friday’s session may see some attempts of a technical pullback, but it would be extremely critical to see if the market sustains such attempted pullback, if any.
The immediate supports exist in the 10,180-10,200 zones, which is an important pattern supports that also coincides with the 50-DMA for the market.
The current structure of the charts has most likely pushed our market into prolonged time frame of consolidation. We recommend remaining light on overall exposures and maintain a cautious view on the market.
STOCKS TO WATCH: Long unwinding was observed in stocks like Suzlon, South Bank, Adani Power, Vedanta, PNB, Hindalco, Tata Motors, Bank of Baroda and Ashok Leyland.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at email@example.com)
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Via:: Economic Times – Stocks