Nifty: Trade Setup: Wait for Nifty50 to cross 15,915 level before making fresh buys

The Indian equity market put up a resilient show ahead of Thursday’s expiry of weekly options contracts and ended the day on a positive note. The index is at the kissing distance of its all-time high point.

The market saw a tepid start to the day and Nifty hovered near its first resistance point at 15,800. However, after slipping to the lowest point of the day in the morning, the index recovered over 100-odd points. The headline index finally ended the day with a net gain of 41.60 points, or 0.26 per cent.

Thursday’s trade setup hinted at Nifty likely to attempt a fresh life-time high level if one were to look at the options data. The 15,800 level had maximum concentration of Call Open Interest at the beginning of the session. However, that level saw heavy Call unwinding during the day. The maximum Call OI has now shifted at 16,000 level. This indicates that if Nifty is able to sustain above 15,800 level, then it has greater chances of testing the 16,000 level. If Nifty fails to hold above 15,800, then the index may go into a broad consolidation again.

The 15,900 and 15,965 levels are likely to act as key resistance points in Thursday’s session. Supports should come in at 11,750 and 15,700 levels.

The Relative Strength Index (RSI) on the daily chart stood at 59.38; it remains neutral and does not show any divergence against the price. The daily MACD remains bearish and trades below the Signal Line.

Pattern analysis shows after testing the high point at 15,915, Nifty has consolidated in a sideways trajectory. For a meaningful thrust on the upside, Nifty will have to move past this point convincingly.

That said, it’s better to wait for Nifty to move past the 15,915 levels convincingly before making aggressive purchases. The other factor that warrants caution is that even if Nifty reports an incremental high, there is a very strong resistance at 16,000 level, as indicated by options data. We recommend staying selective and adopting a mindful approach while chasing the momentum on the upside.

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