Trade setup: Nifty has hurdle in 9,050-9,160 zone; stay cautious

The domestic stock market consolidated and traded in a defined range before ending in the negative zone on Monday. NSE Nifty made a muted start, but soon slipped into the red. The index finally settled with a loss of 118.05 points or 1.30 per cent at 8,993.85.

The 50-stock pack was unable to move past the critical 9,050 level. Dalal Street will open after a day’s gap, and the price action of Nifty against the 9,050 level will be important to watch out for. With a positive opening expected, the index will have to move past and sustain above this zone.

Volatility rose a bit on Monday as volatility index or India VIX rose marginally by 3.44 per cent to 51.46.


Wednesday’s session is likely to see 9,050 and 9,160 levels act as resistance. Support is expected to come in at 8,910 and 8,855.

The Relative Strength Index (RSI) on the daily chart was at 46.32 and stayed neutral, showing no divergence against the price.

The daily MACD was bullish and traded above its signal line. Except for a white body, no other significant formations were noticed on the daily charts.

As per pattern analysis, Nifty has attempted to mark a temporary bottom in the 7,650-7,800 zone. The index had rebounded from this range and marked a higher top near 8,050. In the immediate short term, the index will have to move past and stay above 9,050.

A positive start to the day is not ruled out. However, Nifty sustaining above 9,050 will be key. As per weekly options data, 9,000 is likely to act as an inflection point, as this level has the accumulation of the highest number of Call and Put open interest. A tactical shift of this figure on either side will dominate the trade for the short term.

We would advise traders to continue exercising a higher degree of caution and protecting profits on either side until a directional bias for the short term is established.

(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)