Nifty is overbought currently, and it has also completed its classic measurement implication following a breakout above the 12,000 level. Given the current technical setup, there should not be even a slightest surprise if the market consolidates o...
We not only recommend guarding profits vigilantly at higher levels, but also advise investors to focus more on defensive stocks rather than chasing high beta names
Just like it happens in a typical Mahurut Trading Session, Nifty opened higher, came off its high gradually but still managed to end on a positive note. The market saw a gap-up start to the one-house special session, and marked an intraday high within the first few minutes. After that, Nifty gradually pared some of its gains while maintaining most of the opening lead. Not at any point in time did the index witness any selling or profit taking, as the short one-hour session tends to witnesses token trades.
The headline index finally ended with a net gain of 60.30 points, or 0.47 per cent, While the Indian market was shut on Monday, all global markets were open and so were the US markets. Nifty will adjust to the overnight trade setup and discount Saturday’s gain in the process on either side. The short one-hour session usually has little bearing, given its token nature and the market will again be moved by the broader technical when it starts trading on Tuesday.
Nifty is overbought currently, and it has also completed its classic measurement implication following a breakout above the 12,000 level. Given the current technical setup, there should not be even a slightest surprise if the market consolidates or sees profit taking at current levels.
The RSI stood at 75.99 level and has marked a new high, and this is a bullish indication. It remains neutral, as it does not show any divergence against the price. The daily MACD remains bullish and trades above the signal line.
In the next trading session, we might see some incremental moves, but it is not advised to chase such momentum. Anyone chasing market momentum in a blind way would invite trouble and get caught on the wrong foot, as the risk-reward is terribly skewed in a unfavorable manner at this point.
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We reiterate chasing the market cautiously. We not only recommend guarding profits vigilantly at higher levels, but also advise investors to focus more on defensive stocks rather than chasing high beta names, which are now due for a consolidation and profit taking. Even if this means letting go some of the gains, a cautious approach is going to pay off in the long run.
(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)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
