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Market outlook: Nifty may trade volatile as it attempts to retake 10600 level

  • 8 November 2018

In a special one-hour Muhurat Trading session on Wednesday, stock benchmarks remained buoyant and ended with decent gains. The market saw a positive opening and remained sideways in a very capped range. The NSE benchmark Nifty ended with a gain of 68.40 points or 0.65 per cent.

The short session remained on the expected lines, as Nifty continued to resist the 10,600-10,650 zone, with the index settling below the 10,600 mark.

For Friday’s session, expect a positive or a stable start to the day. Though the session will begin after a day’s gap and the stocks might align itself with the global markets, the zone of 10,600-10,730 will remain critically important, as Nifty will approach its stiff resistance area for the near term.

Friday is likely to see the levels of 10,650 and 10,730 acting as immediate and stiff resistance for Nifty. Supports may come in at 10,530 and 10,470 levels.

The Relative Strength Index (RSI) on the daily chart stood at 52.9874 and it has marked a fresh 14-period high, which is bullish. It showed no divergence against the price. The daily MACD remained bullish while trading above its signal line. No significant formations were seen on the candles.

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If we look at the pattern analysis, after suffering a sharp corrective decline from September, Nifty has formed a small falling channel while attempting to form a base and pullback.

This pullback had a stiff resistance in form of falling trend line and the 200-DMA, which remained in the 140-point range. This zone is likely to cause turbulence and instil some volatility in the market.

For Friday, we expect a stable start to the trade and Nifty attempting to move past the 10,600-10,650 zone. However, even if it manages to trade in this zone, we will need to approach the Markets with great caution.

This 140-point range is expected to remain quite turbulent for Nifty, and each upmove shall have to be used to protect profits at higher levels.

We expect some volatility to get ingrained at higher levels. Despite upmoves, there are chances Nifty might get pushed into some consolidation at higher levels. We recommend approaching Friday’s trade with great caution and protect gains at higher levels.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)