The domestic stock market closed a disappoint week on a cheerful note on Friday with NSE Nifty logging a gain of 88 points or 0.82 per cent at 10,829.35. The rise in part was helped by oversold nature of the market on the short term charts.

The rebound from the low point was led by short covering. This was evident as the recovery resulted in a significant decline in open interest. Nifty futures also ended with a reasonable premium after trading with a minor discount.

The opening on Monday will see the market reacting to a slew of measures announced by the government to spur the economy. There are possibilities of a positive knee-jerk reaction. On the other hand, the global setup remains extremely weak. The US market ended with a deep cut on Friday, and the Asian markets may inherit this weakness on Monday. Amid these conflicting factors, Nifty is likely to find stiff resistance near the 11,000 level.

Monday’s session is likely to see 10,890 and 11,000 levels act as resistance points. Supports may come in at 10,750 and 10,680.

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The Relative Strength Index (RSI) on the daily chart stood at 36.81 and remained neutral, showing no divergence against the price. The daily MACD continued to remain bullish while trading above its signal line.

On the short term horizon, the headline has protected its immediate low of 10,780 despite an intraday violation of that level. As of now, the 10,780-10,800 zone continues to be a crucial support. The resistance zone has shifted lower from 11,170 to 11,000 level, and all positive reactions are likely to get capped near this point.

We recommend traders to remain very careful while chasing the momentum and continue to protect profits at higher levels. While continuing to keep exposures at very modest levels, a cautious view on the markets is advised for the day.

(Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)





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