As the markets drifted into the negative territory, the weakness intensified as the Nifty went on to go very close to the 15,900 levels. However, the second half of the session saw the markets do a wonderful turnaround. Nifty rebounded over 200-points from its low point and closed with a net gain of 144.35 points (+0.90%).
There was a good premium income opportunity on the expiry day. The levels of 15,900 and 16,200 saw a great amount of Put and Call writing. This ensured that the Nifty did not slip below 15,900 and did not move past 16,200 levels.
However, despite such trending moves, the index continues to remain in the broad trading range of 15,700- 16,400 levels. Any sustainable directional bias will be established only after either of these levels is taken out. Until this happens, we will see the Nifty oscillating in this defined range.
While continuing to stay in this defined range, there are possibilities that the index may extend its move higher if there are no negative overnight cues to deal with. The levels of 16,235 and 16,350 will act as potential resistance points. The supports come in at 16,080 and 16,000 levels.
The Relative Strength Index (RSI) on the daily chart is 43.83. It is an upward rising trajectory, stays neutral, and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line.
A candle with a long lower shadow emerged on the charts. This closely looks like a bullish hammer, except that it has a small upper wick. Its occurrence after a decline and near a support area may lead to a potential reversal subject to confirmation on the charts.
Overall, it is expected that if there are no overnight cues to deal with, the Nifty may extend its up move. This may see the markets attempting to test the upper edge of the current broad trading range. In any case, even if there are any corrective moves, shorting the markets must be avoided. So long as the index is above 15,700 levels, all the declines must be used to purchase good quality stocks. A positive outlook is advised for the day.
(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based at Vadodara. He can be reached at firstname.lastname@example.org)