Trade Setup: Nifty may stage a technical pullback on Tuesday; stay stock-specific

Headline index Nifty had a weaker-than-expected but positive opening. However, the index headed nowhere and continued to oscillate within a 191-point range. This continued for the entire session and the market stayed within this band and did not take any kind of directional cue. In the end, Nifty ended the day with a gain of 18 points or 0.12 per cent.

Unless there are any negative overnight cues to deal with, we may see some impending technical pullback. Monday’s session has led to the formation of almost parallel bar with little difference between today’s and the previous session’s lows. Another important hint that the F&O data throws is that while significant amount of OI was added with the decline, even a modest rise has not seen any major reduction. This means that this short interest continues exist in the system. Secondly, we have weekly options expiry coming up a day early as Thursday is a trading holiday. This too is likely to influence the trade to some extent.

ET CONTRIBUTORS

With all things remaining normal and if no overnight negative news is to be dealt with, expect a modestly positive start to the day. The levels of 15,035 and 15,100 will act as likely resistance points, while support will come in at 14,900 and 14,855 levels.

The daily RSI stood neutral at 52.74 and did not show any divergence against price. The daily MACD was bearish and remained below its Signal Line. Another Spinning Top emerged on the charts; this continued to indicate indecisive behavior of market participants.

The market is seeing highly stock and sector specific action. This phenomenon will continue to persist for a couple of days more. Rather than sectoral leadership, we will see outperformance coming from specific stocks from different sectors. We will also continue to see resilient performances from energy pack, midcaps, IT and select pharma stocks as well. We reiterate staying very selective while approaching the market. A cautious view is advised until the market takes a directional resumption of trend on either side.

(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)