Trade setup: Nifty key resistance seen at 14,690 and 14,770 levels; stay stock-specific

Much on the anticipated lines, the Indian equities put up a highly resilient show. Even though it ended lower, it recouped all its losses to end on a flat note. Following a weak global setup, the Nifty saw a gap down opening, but formed its intraday low in the initial minutes of the session. It soon pulled back from the low point to recover half of its opening losses. The Nifty traded in a range after that but the late afternoon trade saw some more recovery from those levels. The headline index crawled inside the positive territory and ended flat with a negligible gain of 3.05 points, up 0.02%.

The technical pullback was expected given the likely opening levels near the support level, which also had the highest Put OI. The lower PCR of 1.07 yesterday also aided the resilient behavior of the markets. As we head into Tuesday’s trade, we see the Nifty continuing to consolidate and struggle inside its congestion zone formed between 50-, and 100-DMA, which stand at 14,768 and 14,474 respectively. The index will find crucial resistance and support at these levels respectively over the coming days as it continues to consolidate.

Volatility edged higher as the India VIX rose by 2.89 per cent to 23.6925. With a stable start expected on Tuesday, Nifty is likely to find resistance at 14,690 and 14,770 levels. The supports will come in at 14,580 and 14,500 levels.

The Relative Strength Index (RSI) on the daily chart is 49.71. It is neutral and is not showing any divergence against the price. The daily MACD is bullish and above its signal line.


The pattern analysis shows that the Nifty may stay well within the falling channel that it has created after forming the lifetime high point of 15,431. While staying within this declining channel, it has formed a small congestion area between 50-, and the 100-DMA levels. Nifty will not take any directional cue unless it moves past these crucial resistance points or violates these important supports.
Overall, the volatility in the market is also likely to increase in the coming days. We are also likely to see the texture of the markets getting more defensive in nature. It is likely that defensive and low beta stocks may see improvement in their relative strength against the broader markets. We reiterate the need of staying stock-specific and protecting profits at each level in the markets.

Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at [email protected]

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