NSE Nifty on Thursday found support at its 100-DMA level for the fourth straight session and reversed previous day’s losses to end with a gain of 100.10 points or 0.90 per cent.
The session remained very much within the defined corners, as the highest build-up of the Call open interest at 11,300 prevented the index to close above this level.
At the same time, strong support at 100-DMA came into play once again as the 50-stock pack sharply rebounded from this level.
The zone between 100-DMA and 200-DMA continues to remain a key support area.
On Friday, we expect a flat to a mildly positive start. The pullback that we witnessed is likely to continue. Also, Friday is the last session on which traders are expected to adjust their positions prior to general election results. The exit polls will start rolling in from Sunday evening, and this will see a high degree of caution on either side of the market.
Friday’s session is expected to see 11,310 and 11,400 levels act as immediate resistance points. Supports may exist at 11,180 and 11,100 levels.
The RSI on the daily chart stood at 40.2685 and has stayed neutral against the price, but it marked a minor higher bottom. The daily MACD was bearish and traded below its signal line.
An occurrence of a white candle near the 100-DMA support area has once again highlighted the importance of this level as one of the key supports.
As Dalal Street approaches general election results, it has done so on a much lighter note. Much of the toxicity has been done away with during the recent corrective phase.
Nifty futures premium, which was around 90 points at the start of the series, has come down significantly.
We expect short covering bouts to continue, but also see the index finding resistance above the 11,400 level. We advise traders to avoid aggressive shorts and continue to maintain a stock-specific approach for the day. Volatility will continue to remain ingrained in the market.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at email@example.com)