Market outlook: Nifty may open positive but 10,170 level to offer stiff resistance

A modestly positive opening to the trade is expected once again, but it would be imperative for the market to move past the 200-DMA mark, which stands at 10,168. Longer the market stays below 200-DMA, more vulnerable it will remain to selling.

The Nifty50 failed to sustain above the 200-DMA levels on Wednesday, despite a strong and sustainable pullback. The intraday gains fizzled out and the market came off significantly from the high point of the day.

After great volatility, Nifty ended the day with a modest gain of 30.90 points or 0.31 per cent. The Nifty has resisted to 200-day moving average (DMA) on a closing basis after breaching that level a day before.


This level will continue to pose a threat to the Nifty in the immediate short term.

Going into trade on Thursday, expect a similar behaviour from the market. A modestly positive opening to the trade is expected once again, but it would be imperative for the market to move past the 200-DMA mark, which stands at 10,168. Longer the market stays below 200-DMA, more vulnerable it will remain to selling.

Thursday will see the levels of 10,170 and 10,245 playing out as immediate resistance area for the market. Supports come in at 10,040 and 9,980 zones.

The Relative Strength Index (RSI) on the daily chart is 38.0574, and it remains neutral showing no divergence to the price. The daily MACD continues to remain bearish, while trading below its signal line. No significant formations were seen on the candles. Going by the pattern analysis, it is seen that the Nifty did breach its 200-DMA levels on a closing basis a day before, but stayed within its filters.

A pullback was attempted, but it resisted at the 200-DMA, which it had marginally breached in the previous session. Overall, the Nifty still continues to remain on tenterhooks on expected lines.

It would be important for the market to move past and sustain above the 200-DMA at the earliest to form a temporary bottom once again. Staying below the 200-DMA for long will make market vulnerable.

However, the oversold nature of important oscillators on both, daily and weekly charts, point towards larger chances of a technical pullback.

While remaining moderate on the overall positions, continuance of a cautious outlook is advised for the day.

STOCKS TO WATCH: Fresh longs were seen being added in stocks like JSW Steel, DLF, PFC, RPower, Bharti Airtel, REC, ITC, NTPC, Ashok Leyland, Marico, ONGC, Reliance Capital and Reliance Industries.

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