Indian stock market continued to suffer from bad breadth, while negative undertone continued to persist. The session opened on a negative note and went on to test the 200-DMA level in the morning.
The NSE barometre Nifty came off from those lows, but spent the entire day in a defined zone, while oscillating in a capped range. The headline index ended the day down 54.80 points or 0.50 per cent.
We see a flat to modestly positive opening on Tuesday and expect the 500-DMA and 200-DMA zones of 10,817-10,857 to act as important immediate support.
The levels of 10,945 and 10,990 are expected to act as resistance, while supports may come in at 10,850 and 10,810.
The Relative Strength Index (RSI) on the daily chart is 51.7995, as it remained neutral, showing no divergence against the price. The daily MACD continued to remain bullish and traded above its signal line.
A black body emerged on the candles. Apart from pointing towards continued downside, it does not reflect any significant reading in the present context.
Through pattern analysis of the daily charts, it is now evident that after achieving a breakout above 10,950, Nifty has suffered something more than a mere throwback. The index has dipped below its breakout point of 10,950 level, and for it to resume its up move, it will be necessary to move past this level.
As mentioned, fractured market breadth continues to remain a concern. Unless the breadth improves, we see only few pockets of largecaps performing, while the up move in the broader universe will continue to elude the market.
We recommend continuing to remain stock specific. Shorts should be avoided, and all dips should be used to make select purchases. Maintaining a cautious view is advised for the day.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at firstname.lastname@example.org)