Market outlook cautious till Nifty stays below 200-DMA

Corrective phase persisted on Dalal Street as Indian equities continued with its modest slide on Thursday. The NSE benchmark Nifty once again failed to sustain above the 200-DMA despite enjoying a modestly positive opening.

The index ended the day with a loss of 40.50 points or 0.40 per cent. In volatile moves, the session remained capped in a range.

As we approach Friday, the analysis remains once again on similar lines. The Nifty has resisted to the 200-DMA, which stands at 10,171 now, and unless Nifty moves past this level, it will continue to pose resistance to the market on a closing basis.


We expect a quiet opening once again. However, the levels of 10,170 and 10,135 will continue to offer strong resistance area for the market. Supports continue to remain at 10,040 and 9,980.

The Relative Strength Index (RSI) on the daily chart is 36.4130 and this continues to remain neutral showing no divergence against the price. Daily MACD stays bearish, while it trades below its signal line. No significant formations were observed on the candles.

Having a look at the pattern analysis, the Nifty dipped below the 200-DMA at close, and while attempting to pullback, this level has offered a stiff resistance.

Any pullback will be seen only after the Nifty moves past and closes above the 200-DMA. Having said this, the oscillators have begun to turn upwards for the Index on the daily charts, while being still oversold on the weekly charts.

The level of 10,040 will continue to offer a strong pattern support for the market. However, it would still remain important to note that in spite of any strong opening that the market may see at opening of during the session, unless it ends itself above 200-DMA, it will continue to remain vulnerable to selloffs.

We continue to recommend approaching markets on a very cautious note until it throws an imminent pullback taking it above 200-DMA at close.

STOCKS TO WATCH: Good technical set up was observed on counters such as Bajaj Finserv, CG Power, Vedanta, Hind Zinc, IndusInd Bank, IDFC, Reliance, Tata Power, Tata Motors, Hindalco and NTPC.

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