The Markets continued to correct on Friday as well as it ended the day at 6140.75  with net loss of 46.50 points or 0.75% after a volatile session with remained largely in a downward trajectory.

Today, expect a negative opening once again and the correction in the Markets is expected to continue, at least in the initial trade. The Markets are expected to open lower and test the support levels of 6100-6110. The intraday trajectory that the Markets forms after opening would be important to decide the trend for today. However, in case of a lower opening, improvement going ahead in the session cannot be ruled out as well.

For today, the levels of 6185 and 6210 would act as resistance for the Markets today and the levels of 6100 and 6075 are immediate supports on the Charts.

The lead indicators continue to show likelihood of continuation of corrective activities. The RSI--Relative Strength Index on the Daily Chart is 51.8674 and it has reached its lowest value in last 14-days which is bearish. Also, the RSI has set a new 14-day low whereas NIFTY has not yet and this is Bearish Divergence. The Daily MACD remains bearish as it trades below its signal line.

On the Weekly Charts, the RSI is 57.4086 and it is neutral as it shows no failure swings or any divergences. The Weekly MACD remains bullish as it trades above its signal line.

On the derivative front, NIFTY has continued to shed over 5.04 lakh shares or 2.42% in Open Interest. This clearly shows continuation of correction and shedding of long positions from higher levels.

Given the above readings, it is clear that weakness in the overall broader markets is likely to persist and we might see the Markets testing the support levels of 6100. However, it is also important to note that these are important supports and we may see some improvement in the Markets going ahead in the session as well in case of early weakness. However, we will need to see fresh longs to get build up resulting in addition in Open Interest.

All and all, we would like to point out once again that this is a corrective phase and no structural breach on the Charts is seen. Shorts should be avoided and stock specific out performance would be seen. Moderate positions should be maintained and liquidity preserved. Also, vigilant protection of profits at higher levels is advised. Overall, cautious optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,