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Market Outlook: Nifty50 likely to see quiet start, set to inch higher

The daily MACD stays bullish even as it traded above its signal line.

, ET CONTRIBUTORS|
Jan 08, 2018, 07.47 AM IST
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The Relative Strength Index or RSI on the daily chart stood at 63.3155.
After consolidating in the first half of the session, Friday’s market session saw the benchmark Nifty50 attempt to confirm its breakout. The market ended at the high point of the day, with the index wrapping up the day with net gains of 54.05 points, or 0.51 per cent. Going into Monday’s trade, Nifty is likely to see a quiet start. Having said that, we also feel despite some consolidation, the index is ultimately set to inch higher and test the 10,650-10,690 levels in the coming days. These levels may be tested if the attempted breakout gets confirmed.

The 10,590 and 10,635 levels will play out as immediate resistance, while supports will come in at 10,530 and 10,490 levels. The Relative Strength Index or RSI on the daily chart stood at 63.3155. It shows a minor bearish divergence, as the index marked a fresh 14-period high while the RSI did not. However, it is seen breaking out from a pattern formation. The daily MACD stays bullish even as it traded above its signal line. On the candle charts, a rising window pattern occurred.

This is usually a gap and often results in continuation of the upward move. Pattern analysis shows a clear attempt by the Nifty to break above the 10,490 level. It has attempted a breakout and in all likelihood, it may confirm this in the coming days even if we see this confirmation after some intermittent consolidation.

All and all, the buoyant intent of the market is evident and we may continue to see select pockets robustly outperforming the broader market. Despite some consolidation that we might see at higher levels once again, there are no signs of any weakness on the charts. Investors should completely avoid shorts and use all consolidation or minor corrective move to pick up select stocks, while continuing to protect profits at higher levels.

STOCKS TO WATCH:
Fresh long positions were seen being built in stocks like Reliance Communications, Adani Power, TV18 Broadcast, IDFC Bank, ITC, Apollo Tyre, RBL Bank and Bharat Forge.

nifty chart- snip


(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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