Trade Setup: 13,000 level crucial for Nifty; stay stock-specific

While staging a rally in the second half of the session on Thursday, the domestic equity market recovered a good amount of what it had lost in the previous session.

After opening on a quiet note, Nifty soon slipped in the red in the morning trade. After that, it slipped a bit more as it spent the first half of the session in a defined but negative territory. It was once again the second half of the trade which saw the market stage a late rally. At one point, Nifty also went past the 13,000 level but retraced a bit to settle with a net gain of 128.60 points or 1 per cent.

The session was highly dominated with weekly expiry of options and the monthly derivative expiry as well. 13,000 level saw the highest concentration of Call open interest throughout the day and this ensured that Nifty settles below this level. In the same breadth, the highest Put OI concentration at 12,800 made the index move above this level.


Nifty has ended at a crucial juncture and stays exactly in the middle of 12,960-13,000 resistance zone. The opening of the market, and the behavior of the index against the levels of 13,000 will be crucial to watch in the next session.

Volatility dropped sharply as India VIX declined by 13.42 per cent to 20.0225. Friday's session is expected to see the levels of 13,030 and 13,120 act as resistance points, while support will come in lower at 12,910 and 12,780.

The Relative Strength Index (RSI) on the daily chart is 68.35; it remains neutral and does not show any divergence against price. The daily MACD is still bullish as it trades above the Signal Line. However, a sharply narrowing slope of histogram remains a concern.

A candle with a long lower shadow occurred on the charts. This continues to indicate a likely stalling of the present rally if the market does not move past the previous high point. The lead indicator is marking lower tops. The classical bearish failure swing that happened yesterday stays very much in force. On the price front, there are possibilities of Nifty marking incremental moves on the higher side if it is able to move past 13,000 and stay above that. If it slips or stays below 13,000, it remains vulnerable to profit taking bouts at current levels.

Overnight cues from the US will be absent because of Thanksgiving holiday. We reiterate to stay stock-specific while having a tight vigil on protection of profits.

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