Markets are likely to open on a flat to mildly positive note and are likely to consolidate. The Markets did test the levels of lower end of the trading band of 5950 and thus, the behavior of the Markets vis-a-vis this level would be important. While intraday trajectory would continue to remain important, the Markets are also likely to react to the IIP numbers due later today. Also, some activity would be influenced by the Infosys numbers, but reaction to IIP would be important.
The levels of 6020 and 6045 shall continue to act as resistance. The levels of 5950 shall continue to act as supports so long as Markets continue to trade above it. Another support comes in at 5920 levels.
The lead indicators and F&O data point towards mild upward bias. The RSI--Relative Strength Index on the Daily Chart is 59.3123 and it is neutral as it shows no negative divergences or failure swings. However, the Daily MACD has just reported a negative crossover and is now bearish as it trades below its signal line.
Having said this, on the other hand, first time since last couple of sessions, the NIFTY January futures have reported addition in Open Interest. It has added some 6.08 lakh shares or 3.92% in Open Interest. This is certainly a positive for the Markets. The NIFTY PCR stands at 1.04 as against 1.
Though Markets is not completely out of the woods, we have fair chance of the Markets not breaking the levels of 5950 as pointed out by the above reading. However, bad IIP numbers can influence that for a short term and we might see the Markets reacting in a knee-jerk fashion. But overall, the trend remains intact, at least as of now and bias remains mildly tilted towards upside. The Markets have come back to the same levels from where it broke out couple of sessions ago.
All and all, until the Markets trades above the levels of 5950, we shall continue to remain tightly in a trading range. Further weakness shall creep in only if it dips below this levels. We would continue to reiterate our advice of remaining light and selective on the positions. While shorts should be strictly avoided, fresh longs should be taken very selectively while vigilantly protecting profits at higher levels. Overall positive caution is advised for today.