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Trade setup: Nifty may continue to consolidate; 12,103 level key

Friday’s session may see a tepid start, with 12,065 and 12,110 levels acting as resistance.

, ET CONTRIBUTORS|
Dec 05, 2019, 08.47 PM IST
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The RSI on the daily chart stood at 57.34 and stayed neutral, showing no divergence against the price.
NSE Nifty was in no hurry to breach double top resistance level at 12,103 on Thursday, as the index ended with a marginal loss after coming off from day’s high. The domestic stock market opened higher, but gave up its early gains to slip below the 12,000 level after RBI monetary policy announcement. After recovering a bit in late trade, the 50-stock pack ended with a loss of 24.80 points or 0.21 per cent at 12,018.40.

The Reserve Bank of India in a surprising move maintained repo rate at 5.15 per cent, keeping its focus on rising inflation.

The central bank raised inflation projection for the second half of the current financial year to 5.10-4.70 per cent. Consequently, the stock market, which had already baked in a 25 basis point cut, gave up its gains.

Nifty has delayed the breakout in the near term even though it has held on to its important short-term 20-DMA level at 11,983.

Friday’s session is likely to see a tepid start, with 12,065 and 12,110 levels acting as immediate resistance. Supports may come in at 11,950 and 11,910.

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The Relative Strength Index (RSI) on the daily chart stood at 57.34 and stayed neutral, showing no divergence against the price. The daily MACD was bearish and traded below its signal line. A black body occurred on the candles, while the Percentage Price Oscillator (PPO) stayed negative.

As per pattern analysis, Nifty has failed to break above the double top resistance at 12,103 despite giving incremental highs. The index has stayed in a broad consolidation zone of 12,100 to 11,800 levels.

The headline index is expected to remain in this consolidation zone unless 12,100 is taken out comprehensively on a closing basis.

We recommend traders to keep positions on either side as the market hasn’t established any directional bias. We expect this consolidation to continue for some time and suggest keeping positions at moderate levels and avoiding excess leverage.

(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)
(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.)

Also Read

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Trade setup: Nifty may continue to consolidate; stay stock specific

Trade setup: Better stay light on positions; Nifty may consolidate

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