Markets

Market outlook: Nifty stares at possible consolidation; 100-DMA remains key

The domestic equity market ended the day on a flat note despite a weak opening.

After the interest rate hike by the Federal Reserve, the US markets suffered losses and this overnight global weakness percolated to early Asian trade as well, including the Indian market, that saw a negative opening today.

Market, however, pared most of its losses and eventually settled 15.60 points lower at 10,951.70.

The level of 100-DMA, which is presently at 10,936, assumes great importance now. The Nifty index recovered to end the day with a minor loss, but it has rested on the 100-DMA.

Friday may see a stable opening and the intraday trajectory of the market will be important to watch. Moreover, the behavior of the market against the 100-DMA will remain an important thing to be observed.

The levels of 10,990 and 11,045 will act as immediate resistances, whereas key supports may come in at 11,930 and 11,860.

The Relative Strength Index (RSI) on the daily chart is 60.9693 and it remains neutral against the price. Daily MACD remains bullish as it is above its signal line.

Apart from a white body that emerged, no significant formations are seen on candles.

From pattern analysis, it is evident that the Nifty has managed to cross the falling trend line pattern resistance. This pattern resistance is in the form of a trend line that joins the high of 11,760 with subsequent lower tops.

Though Nifty has managed to cross it, it has halted its upward movement near its 100-DMA.

The short-term indicators on the daily chart remain slightly overstretched and Nifty continues to stare at some possible consolidation.

Given the underlying strength in the market, such consolidation may not result into any significant downsides, but the market continues to remain vulnerable to profit booking at higher levels.

Stay cautious and adopt a highly stock specific approach for the day.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected])

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