MARKET TREND FOR THURSDAY, FEBRUARY 23, 2017
The Indian Equities had an eventful session as the NIFTY
went very near to its 52-week high of 8968 levels while forming intraday high
of 8960.75. We saw increased amount of volatility creeping in as the NIFTY
witnessed bouts of profit taking very much on expected lines. Currently the
NIFTY trades near a Double Top resistance area and we will see continued
consolidation with increased amount of volatility. This corrective activity in
form of a range bound consolidation will be required if the NIFTY has to
continue with its up move. Today, we expect a tepid start to the Markets and
the levels of 8960-8975 will remain critically important levels to watch out
for NIFTY. So long as NIFTY trades below these levels, volatile oscillations
will continue to remain. NIFTY would have ended with losses today if not for
RELIANCE which single-handedly contributed 54 points to NIFTY.
For today, the levels of 8960 and 8995 will remain critical
resistance levels for the Markets. The supports now come in much lower at 8865
and 8810.
The Relative Strength Index – RSI on the Daily Chart is
74.2911 and it continues to display signs of exhaustion. It trades in “overbought”
territory and while the NIFTY has made a fresh 14-period high, RSI has not and
this has resulted into Bearish Divergence. On the other hand, the Daily MACD
has reported a positive crossover and it is now bullish while trading above its
signal line. On Candles, A Spinning Top occurred. This often portrays
indecision on part of Market participants.
The derivative segment continued to saw increased rollovers.
The NIFTY February series saw shedding of 28.31 lakh shares or 17.40% in Open
Interest while the March Series added over 36.84 lakh shares or 31.56% in Open
Interest. There has been net addition in total open interest.
The pattern analysis clearly shows NIFTY approaching a
Double Top formation and it is beyond doubt that this will act as major pattern
resistance for the Markets. Every time when the NIFTY will approach this zone,
it will remain vulnerable to volatile movements and profit taking bouts.
However, in the same breath, it is important to note that there has been
divergence in lead indicators. This means that though there can be some time
that the Markets may consolidate but it is also clearly showing good amount of
steam left in it.
Overall, as of now, given the structure of the Charts and
F&O data read along with lead indicators, we feel that overall up trend is
likely to persist. We will see Indices scaling higher levels but at the same
time it will not be without volatile oscillations and profit taking bouts.
However, in a broader scenario, we advise remaining light on over all positions
and in fact make select purchases with corrective declines. Expiry too will
dominate as we enter the expiry of the current derivative series and today
being the last trading day of the week may keep caution levels somewhat high.
Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member:
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
+91-98250-16331
