Markets

Nifty likely to continue rangebound consolidation for sometime

We had categorically mentioned that testing of the psychological mark of 10,000 can induce correction in the market. In line with this analysis, the market did touch this mark but soon pared nearly 60-odd points from the highest point of the day and ended flat with negligible loss of 1.85 points or 0.02 per cent. As mentioned in Tuesday’s note, we do not expect a significant move beyond 10,000 mark too soon. We expect a quiet start and continuation of the rangebound consolidation on Wednesday. Being the penultimate day of F&O expiry, we also expect rollover-induced volatility to persist.

The 10,010 and 10,045 levels may act as immediate likely resistance. Supports will come in at 9,910 and 9,840 levels.

The Relative Strength Index or RSI on the daily chart stood at 70.6492. Though it remains neutral showing no divergence, the RSI remains modestly overbought. The daily MACD stays bullish as it trades above the signal line.

Pattern analysis showed though the market continues to trade comfortably above the rising trend line, some amount of consolidation or rangebound correction cannot be ruled out with this trend line acting as strong short-term support.

Overall, the Bollinger bands remain nearly 49 per cent wider-than-normal. This is most likely to prevent any significant upside and may force the Nifty to remain in a range. Further rollovers too are likely to induce volatility in trade. With the lead indicators modestly overbought, we continue to reiterate a cautious view on the Markets for the day.

STOCKS TO WATCH:
1. BOSCH: Buy this stock above Rs 24,245 with a short-term target of Rs 24,625. While the stock showed a continuing buy signal on the MACD, a potentially bullish reversal candle has occurred. More so, this is significant as it has occurred near the strong support area of 50-DMA and 20-DMA which remain in close vicinity. A Buy over Stochastic has occurred and this all may see some upward revision in price of the stock. (Any call on this above the prescribed level would be positional and not intraday.)

2. Canara Bank: Buy this stock above Rs 357 with a short- term target of Rs 370. A technical pullback is likely on this stock. A white body occurred with a minor gap near the 50-DMA and 20-DMA support after a sharp corrective action on the Stock. RSI has formed a higher high and shows upward momentum may return. Also, a buy over Stochastic with a bullish divergence may see some technical pullback coming in.(Any call on this above the prescribed level would be positional and not intraday.)

(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. Contentions made in this article are mere observations. Investors should consult their financial advisers before taking any positions based on these remarks. Views expressed are the author’s own do not represent those of ETMarkets.com. The author can be reached at milan.vaishnav@equityresearch.asia)

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