Trade setup: Nifty must defend 11,125 level to stage a pullback

In yet another disappointing session, NSE Nifty ended 130.70 points or 1.16 per cent lower on Monday to log ninth straight fall.

The index has come near to its crucial support zone that exists between the 100-DMA and the 200-DMA, which remain at 11,127 and 11,034 levels, respectively. Even if the market continues to fall, Nifty has created enough room for itself to post a technical pullback, as it has got quite oversold on the short-term charts.

We expect a modestly positive start on Tuesday. However, it would be crucial for the 50-stock pack to defend the 11,125 level, as any slip below this will see some weakness creeping in.


The 11,225 and 11,300 levels are likely to act as immediate resistance on Tuesday, while supports are expected at 11,125 and 11,030.

The daily RSI stood at 31.2772 and it has got very close to the oversold level of 30. The RSI has marked a fresh 14-period low, which is bearish.

The daily MACD continued to stay bearish as it traded below its signal line. Apart from a big black body that emerged on the candles, no other major formations were seen.

The pattern analysis showed that Nifty has not only given up its pattern support of 11,550, but has also slipped significantly below its 50-DMA.

At present, it has taken support at its 100-DMA and remains in close vicinity of its major support that exists at 11,034 in form of the 200-DMA.

Not only on Tuesday, but for the coming sessions as well, we will continue to see volatility staying high.

As we near election outcome, we will continue to see volatility to remain integral part of the trade.

We continue to recommend traders to remain highly cautious and selective on the stocks. Though a technical pullback is overdue, and much likely, we advise to keep all purchases at modest levels and approach the market on a highly cautious note.

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