Trade Setup: 15,000-15,100 strong support zone for Nifty; protect profits at higher levels

In a session which saw a massive risk-on rally, the domestic equity market went on to post robust gains and ended at the high point of the day. Following a cooling off of bond yields which saw a sharp spike three days ago, equities again saw some strong moves across the globe.

After a strong Asian trade setup in the morning, headline index Nifty opened strong, but soon pared bulk of its gains in the first hour. However, after that, and until the end of the session, the market stayed within a steadily rising trajectory and the index kept making fresh incremental highs. Nifty finally ended on a robust note by posting a net gain of 326.50 points or 2.19 per cent.

We enter the expiry of the weekly Options on Thursday. The previous session has almost set the stage for the next session. There was massive Call writing at 15,000 and 15,100 strikes. This zone has now become a strong support zone for Nifty for the coming session. Fresh Call writing was also observed at 15,300 and 15,500 levels. In any case, the index may not have significantly shifted its resistance higher, but it has certainly shifted its support higher for the time being. Volatility cooled off with India VIX slipping another 6.42 per cent to 22.0900. NIFTY PCR stayed strong at 1.47 across all expiries.


If there are no overnight negative cues to deal with, we may see some extension of the up move as Nifty has ended at its high point. The levels of 15,290 and 15,355 will act as resistance points, while support will come in at 15,150 and 15,065 levels.

The Relative Strength Index (RSI) on the daily chart stood neutral at 59.45 and did not show any divergence against price. The daily MACD remained bearish and below its Signal Line. A Rising Window occurred on the charts. This has resulted out of a gap upside. This usually has a bullish implication and results in a continuation of the up move. This remains an area gap. The bullish implications may, therefore, be limited.

NIFTY PCR stood at 1.47 across all expiries and this is not yet in the overbought zone. Also, the narrowing gap of the histogram points at acceleration of momentum and Nifty may move on to test the upper pattern resistance which lied near its lifetime high point. In any case, the index is still within its broad range and has not yet given any breakout. At the same time, since the structural uptrend is very much intact, we recommend to avoid short positions. While opting to make purchases on a highly selective note, continue to vigilantly protect profits at higher levels. A cautiously positive outlook is advised for the day.

(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)