The global trade setup stays neutral to mildly buoyant with the S&P500 testing its lifetime high point. However, from a domestic technical perspective, the Nifty may see a stable to mildly positive opening. The index has managed to crawl above its 50-DMA, which stands at 14,786 currently. It would be crucial to see if the index is able to stay above this point on a closing basis.
The Nifty PCR across all expiries stands at 1.36. The index is approaching the upper falling trend line of the channel that it has been trading in. Given the options data, the index may find stiff resistance near 14,950-15,000.
Monday’s session is likely to see the levels of 15,000 and 15,090; the supports come in at 14,780 and 14,700 levels.
The Relative Strength Index (RSI) stands at 52.21; it is neutral and does not show any divergence against the price. The daily MACD is bearish and trades below its signal line. However, the narrowing slope of the histogram suggests some potential build-up momentum in the pullback.
The pattern analysis shows that the Nifty has managed to move higher. It has again ended above the 50-DMA, which stands at 14786 at present. If the 50-DMA is violated again on a closing basis, we may see some more weakness creeping in the markets.
All in all, the robust move that was seen on Thursday was more because of short covering. This was evident from the F&O data, which showed a decline in the open interest in the Nifty April futures. It would be important that this short covering is replaced with fresh buying if the market is to make any sustainable upmoves.
The incremental upmoves, if any, should be followed in a cautious way. While continuing to adopt a stock-specific approach, profits should be vigilantly guarded 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 email@example.com)