Trade setup: Nifty may continue uptick; don’t short this market

The NSE benchmark Nifty on the expected lines continued with its short covering-led upmove on Wednesday and ended with a gain of 91.50 points or 0.86 per cent.

Though the session remained largely stable, some volatility was sees due to market reaction to the Reserve Bank of India’s monetary policy decision, which was announced in the second half of the session.

Also mentioned the in the previous market note, this outcome remained a non-event apart from some volatile reactions.


The RBI raised the repo rate by 25 basis points to 6.25 per cent.

On Thursday, expect a modestly positive start to the trade, but be ready to see a rangebound trade. Thursday will see the levels of 10,725 and 10,760 acting as immediate resistance areas. Supports may come in at 10,620 and 10,570 zones.

The Relative Strength Index (RSI) on the daily chart is 53.8854 and it remains neutral showing no divergence against the price. Daily MACD stays bearish while trading above its signal line. Apart from a white body that appeared on the candles, no significant formations were observed.

The pattern analysis shows that the Nifty has so far validated the support area of 50-DMA and 100-DMA, which remain in very close vicinity of each other.

In event of any ongoing consolidation, this zone is likely to provide support at closing levels.

Overall, we may see continuing to see some uptick in the initial part of the session on Thursday.

However, with each upmove, cautiously guard your positions, as Nifty remains vulnerable to profit taking at higher levels.

There are no triggers to short the market, and therefore, any downsides that volatility may offer should be utilised to make select purchases.

With no directional bias on either side and with all likelihood of a rangebound trade on Thursday, cautious view is advised for the day

STOCKS TO WATCH: Technically resilient setup was seen in stocks of Godrej Consumer, UBL, Hindustan Zinc, Vedanta, Ashoka Leyland, Tata Motors, IDFC Bank, SAIL, Tata Steel, DHFL and Voltas.

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