Trade setup: Nifty to stay muted, avoid aggressive bets for now

The domestic equity market stayed tepid on Monday, reacting to the attacks on Saudi Arabia’s oil establishments, which caused over 10 per cent spike in crude oil prices. Despite showing some resilience and recovering from the day’s low, NSE Nifty ended 71.40 points or 0.65% per cent lower at 11,003.50.

The headline index seems to have stalled the pullback, which it saw over the past couple of days. The global environment remains anxious, and the developments in the Middle East can trigger risk-off sentiment in equities.

Unless the smoke settles on the commodities front, we do not expect a runaway rally, as stocks also remain weak from the technical aspect as well.


Tuesday’s session is likely to see a tepid start to the day, and 11,060 and 11,110 levels will act as strong resistance points. Supports may come in at 10,935 and 10,910.

The relative strength index (RSI) on the daily chart stood at 48.72 and stayed neutral, showing no divergence against the price. The daily MACD stayed above its signal line.

A spinning top occurred on the candles. The occurrence of a spinning top and the lower high on the bar is enough signs that the market is treading cautiously and exhibiting an indecisive behaviour.

The global sentiment is far from positive. Even if we witness a stable session, aggressive buying must be avoided.

Moreover, the 11,000 level will be key, as it has the highest Put open interest (OI) builtup and the second-highest Call OI builtup.

If Nifty slips below 11,000 and stays below for long, then it may infuse more weakness into the market. A highly cautious outlook is advised for the day.

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