Trade setup: 15,000 and 15,075 key resistance points for Nifty; limit fresh purchases to defensives

Although the Indian equities continued to advance, the session on Monday stayed highly rangebound, while Nifty ended yet another day with modest gains. The trade setup over the week was buoyant and the Indian markets inherited the same as it stepped into the fresh week. The opening that the Nifty got was not as much strong that was expected, but it did see a good and strong start.

However, for the entire session, the Nifty not only resisted key resistance levels, but also traded in a highly defined and capped range of 50-odd points. While it came off a bit from its highs, the headline index managed to end the day with a net gain of 119.20 points, up 0.80 per cent.

From a technical perspective, the Nifty resisted precisely in the 14,950-15,000 area as it marked the day’s high at 14,966. This area is the point where the Index tested the upper edge of the falling channel that it formed after marking the lifetime high of 15,431.

Apart from this falling trend line pattern resistance, the levels of 15,000 also have a maximum concentration of the Call OI, which makes this level a resistance point for this weekly options series. Though this may change going ahead, as of now, Nifty continues to face stiff resistance at 15,000 levels.

The volatility continued to decline as India VIX came off by 2.86 per cent to 20.2250. Tuesday is likely to see the levels of 15,000 and 15,075 acting as resistance points. The supports will come in at 14,880 and 14,800 levels. Any corrective move is likely to make the trading range wider than usual.

The Relative Strength Index (RSI) on the daily chart is 57.72. It has marked a new 14-period high, which is bullish. However, RSI stays neutral and does not show any divergence against the price. The daily MACD is bullish and stays above the signal line. A rising window occurred on the candles. This results out of a gap and usually has bullish implications. However, the current gap is an area gap as it has occurred within an area pattern of a falling channel and holds little significance in the present technical setup.

All and all, we recommend avoiding chasing the momentum unless the Nifty moves past the 15,000-15,100 zone convincingly. So long as the index is below this level, it continues to stay vulnerable to profit taking bouts from higher levels. In the present technical context, while keeping fresh purchases limited to defensive stocks, we recommend using all the up moves to take profits at higher levels. A continued cautious view is advised for the day.

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