Index consolidated but maintained its positive posture: Angel Broking
Today, markets opened higher owing to smart recovery in US markets last night. Index started the proceedings with a gap in-line with the SGX Nifty and then consolidated for the major part of the day. Clearly the momentum was lacking despite index remained in a positive territory throughout the day. We saw some profit booking happening at higher levels but eventually a tail end surge in some of the heavyweight constituents pushed the index higher to close at a kissing distance from the 10700 mark.
Yesterday’s move was an indication that we may surpass the recent sturdy wall of 10650 quite soon. And the banking space became the charioteer of this move. However, the kind of momentum or follow up buying needed after this development was clearly missing. Fortunately, last hour up move lifted index higher to stay convincingly above 10650. Going ahead, we expect continuation of this move towards the cluster of resistance (10750 – 10780) i.e. the downside gap area created on October 4, ‘89-day’ EMA and ‘200-day’ SMA. Hence, it would be a daunting task for Nifty to overcome this web of resistances.
Traders should remain light around this resistance zone and should closely observe how index behaves around it. If Nifty has to conquer this, banking index would play a vital role, which is already showing some outperformance. Also, the midcap index is clearly facing immense selling pressure around its 89-day EMA and since last 5-6 days, all attempts to move beyond have turned unsuccessful. One should keep a close eye on this development as well in order to take some cues for the next path of journey for our market. Till then stock specific approach with a proper exit strategy becomes a prudent ploy.”