The expiry of weekly options ensured that the session remains a controlled one, and this saved the market from any major correction move on Thursday. The market was already showing signs of exhaustion in the previous session.

Nifty opened positive, but soon pared the opening gains to trade in the negative territory for most part of the day. The headline index finally ended the day with a modest loss of 32.45 points, or 0.32 per cent.

The weekly expiry orchestrated the proceedings. The maximum Put open interest stood at strike price 10,000 and it ensured that Nifty closes above this level. Apart from this, the index made a lower top and bottom on the daily chart as it could not breach the previous high.

Volatility declined further as volatility index India VIX declined marginally by 1.17% to 29.6900. The market continued to show signs of exhaustion and diminishing momentum.

In Friday’s session, the 10,065 and 10,120 levels are likely to act as immediate resistance points for Nifty, while supports will come in lower at 9,950 and 9,860 levels. Any move on the downside will make the trading range wider than usual.

The Relative Strength Index (RSI) on the daily chart stood at 66.17. It remains neutral and does not show any divergence against price. The daily MACD remains bullish and trades above the signal line. The PPO (percentage price oscillator) remains positive.

ET CONTRIBUTORS

A Spinning Top appeared on the candles. Its occurrence following a Shooting Star pattern makes the setup weak for the immediate short-term basis. The high of the Shooting Star candle, therefore, becomes an immediate point of stiff resistance for Nifty .

Pattern analysis showed the Rising Wedge has resolved as a continuation pattern as Nifty prevented a breakdown on the lower side. As of now, the index has formed a rising channel for itself with the 50-DMA acting as an immediate short-term support. The 50-DMA currently stands at 9,052.

Overall, Nifty is likely to continue exhibiting signs of exhaustion at current levels. We recommend using technical pullbacks, if any, to protect profits at higher levels. To make any fresh purchases, one must remain highly selective and stock specific. Profits should be vigilantly protected 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 protected])

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