On Thursday, we expect a quiet start to the market. The Nifty is likely to consolidate and remain vulnerable to bouts of profit taking, but the inherent bias will continue to be positive. A large numbers of shorts that are seen are likely to keep any corrective downsides limited. The 10,130 level will continue to act as resistance along with 10,185. Supports exist at 10,025 and 9,960 levels.
The Relative Strength Index or RSI on the daily chart stood at 61.8782 and it remains neutral showing no divergence from price. The daily MACD stays bullish, even as it continues to trade above the signal line. No significant formations were seen on the candles. Pattern analysis showed the Nifty has successfully broken out of the congestion zone that the Index had created over the past couple of days.
The Nifty continues to trade comfortably in the multi-month upward rising channel. Nifty’s Put-Call ratio (PCR) also remains near recent highs. The market remains vulnerable to bouts of profit taking from higher levels, but a large number of shorts that exist in the system shall keep the downsides limited.
We recommend refraining from creating short positions, as a short trap may occur at lower levels. The market is likely to continue consolidation with a positive bias. We continue to recommend making select purchases with each downside while maintaining a cautiously positive outlook for the day.
STOCKS TO WATCH
A positive bias was seen in stocks like ICICI Bank, Axis Bank, Reliance Defense, M&M and HCL Tech. On the other hand, stocks like ONGC, Tata Global, Capital First and HDFC are likely to remain subdued to mildly bearish.