nifty: trade setup: defensive counters to see traction; Time to stop chasing high beta stocks

The stock market had a buoyant start to the week as it opened higher and ended the day on a strong note. The market received a booster shot in the form of HDFC be merged HDFC bank.

This caused both stocks to open with a gap to the upside and strengthen throughout the day. At a time of over 400 winning points Refined, over 352 points were contributed by these stocks. Afternoon trading saw some profit taking but markets picked up momentum.

The index was nearing its intraday high. He then ended the day up 382.95 points (+2.17%).

With Monday’s move, Nifty is convincingly higher above 17,800. This was the first double top resistor for the market. Taking out this point caused Nifty to drag his base up. This makes the 17,800 level a first pattern support in case of consolidation.

Options data shows that the 18,000 strikes saw an accumulation of almost equal numbers of call and put OIs. The highest call OI remains at 18500 levels. This makes the 18,000 level a turning point for Nifty.

The market could surge higher if Nifty can keep its head above 18,000. Any drop below this level will push the market back into some consolidation.

On Tuesday, the 18,100 and 18,145 levels are likely to act as potential resistance points. Supports will come in at 18,000 and 17,880.

Milan4.4ET STAFF

The daily RSI is 68.33. It has made a new 14-period high, which is bullish. It remains neutral and shows no divergence against price. The daily MACD remains bullish, trading above the signal line. By candles, a rising window appeared. It results from a gap on the top. Usually such formations tend to resolve in the direction of the trend. However, this must be confirmed on the next trading day.

The opening of the markets and the trajectory that Nifty forms after the opening

will be crucial to determine the trend or the day. It would be absolutely necessary for Nifty to keep its head above 18,000 if the upward movement is to continue.

Any drop below 18,000 will see the index pushed back into consolidation. It is highly recommended not to chase the high beta stocks and to take a very stock specific approach. The defensive sectors such as pharmaceuticals, IT and FMCG could continue to see traction. Vigilant protection of profits is recommended at higher levels.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and Founder of and (ChartWizard, FZE) and is based in Vadodara. He can be reached at nifty: trade setup: defensive counters to see traction; Time to stop chasing high beta stocks

Adam Bradshaw

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