Nifty opened lower but quickly marked its intraday low during the first hour of trading. After that, it continued to gradually recover from the lows and moved back into positive territory in the afternoon. It extended its gains and ended up recovering over 400 points from its morning low. The global index ended with a net gain of 135.50 points (+0.81%).
The markets will open after an interval of one day. Tuesday was a commercial holiday on Mahashivratri’s account. Nifty will open and adjust to overnight trading signals which are expected to be very hesitant.
F&O data suggests that the 400 point rally seen in the previous session was supported by the addition of new longs. Nifty March futures added over 6.33 lakh shares or 5.99% net open interest. The weekly options data also suggests the highest call OC accumulation at 17,000 levels.
The 200-DMA also stands at 16,913. This means that if the markets extend their bullish move, they have room to rise. In any case, the 16,900-17,000 area is the most immediate resistance area that Nifty will need to navigate in the short term.
Wednesday is likely to see the 17,860 and 17,985 levels act as resistance points. Support is coming in at the 16,710 and 16,580 levels.
The Relative Strength Index (RSI) on the daily chart is 42.40. It is neutral and shows no divergence from the price. The daily MACD is bearish and remains below the signal line.
A strong white candle appeared. It showed the directional consensus of market players. It also shows that prices closed much higher than the levels they opened at.
Overall, there is no doubt that geopolitical tensions between Ukraine and Russia remain fluid. Although the markets do not expect any further escalations than they are now, as the F&O data shows, the fluid situation can go either way.
It is better not only to avoid shorts, but also to limit purchases fresh and in modest quantities. If Nifty continues its bullish move, the test of the 200-DMA index cannot be ruled out. In any case, a sustainable rise will only occur if Nifty completely breaks the 17,000 level.
It is reiterated to approach the markets with caution. If the upmove is extended, high-beta names will fare better. Certain defensive plays in the consumer and IT space also cannot be ruled out. A cautious and selective approach is advised for the day.
(Milan Vaishnav, CMT, MSTA, is a consulting technical analyst and founder of EquityResearch.asia and ChartWizard.ae (ChartWizard, FZE) and is based in Vadodara. He can be contacted at [email protected])