Trade Setup: Nifty has significant support at 14,299; use up moves to protect profits

Opening after a gap of one day, the domestic equity market continued to underperform its global peers and failed to capitalize on the relatively better and buoyant setup as it managed to end the day with a modest gain on Thursday.

The session stayed dominated with weekly options expiry and stayed volatile within a defined trading range. Headline index Nifty did not take any directional cues, oscillated in a defined range, influenced mainly by the weekly expiries. After opening flat and slipping into a corrective mode, the index recovered over 150-odd points from the low point of the day before ending with a gain of 76.65 points or 0.53 per cent.

The level of 15,500 held maximum concentration of Call OI, which shifted higher to 15,600. This ensured that the index was able to move past 15,500, but settled below 15,600. From a technical perspective, it is for the third day that Nifty took support at its 100-DMA at 14,299. Going ahead, this point will act as a technically significant support on a closing basis. Volatility increased a bit as India VIX rose by 2.10 per cent to 20.8900.


Friday's session is likely to have a stable start to the day. The levels of 14,650 and 14,700 will act as resistance points, while support will come in at 14,500 and 14,415 levels.

The Relative Strength Index (RSI) on the daily chart stood neutral at 46.93 and did not show any divergence against price. The daily MACD was bearish and traded below its Signal Line.

Going by the pattern analysis, the index is still very much within the falling channel formed after hitting the peak of 15,431. While staying within this channel, Nifty is below its 50-DMA and above the 100-DMA.

India VIX is moving back and forth every day given the wider than usual trading range. Overall, the fear gauge is trading much around its lower range. This shows that the overall volatility is at its lower range over the past couple of months.

When the volatility is low for a prolonged period, it often denotes period of complacency; such situations require vigilant protection of profits on either side. The market is expected to remain stock-specific. We recommend continuing to approach the market cautiously and using up moves to protect profits rather than making new purchases.

(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)