Trade setup: Nifty50 to remain in a range, stay with defensive stocks

In an unexpected move, the domestic stock market witnessed a large spate of short covering and ended with a gain of 1.14 per cent.

Wednesday will be the penultimate day of expiry of the current derivative series. Expect the trade to remain dominated with rollover activities. A stable move is expected, but the range is likely to remain relatively narrower than the previous session.

We advise traders to continue to refrain from piling up longs until the previous high is taken out by Nifty.


Wednesday’s session is likely to see 11,500 and 11,575 levels act as resistance points. While 11,420 and 11,350 are expected to act as supports.

The Relative Strength Index (RSI) on the daily chart stood at 68.4304 and it remained neutral, showing no divergence against the price.

The daily MACD continued to trade bullish and remained above its signal line. No significant formations were observed on the candles. The pattern analysis of the daily chart continued to show exhaustion of upmove, following a breakout from the previous formation.

The exhaustion was evident from the gap that Nifty created after it tested immediate previous high of 11,572. Though this gap was filled up on the next trading session, this level of 11,572 is likely to pose resistance.

Overall, given the increased bands over the past couple of days, which resulted due to unabated upmoves, there are high possibilities that Nifty will remain within its current range.

It is also unlikely that the index take out the immediate previous high level of 11,572 soon.

Any fresh and sustainable upmove shall emerge only once this level is taken out. Until this happens, there are greater chances of Nifty once again consolidate with limited upsides.

We recommend traders to stay away from chasing any upmove, and keep exposures modest and limited to defensive stocks.

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