Domestic capital markets are going through intermediate consolidations to hold or extend the yearlong spirit of bullishness since 7893.80 of 26/12/2016. Nifty 50 has witnessed the first consolidation of 3.78% (10490.45 of 06/11/2017 – 10094.00 of 15/11/2017) followed by an intermediate reversal of 3.13% (towards 10409.55 of 28/11/2017) and another consolidation of 3.61% (towards previous day low of 10033.95) in last 23 trading sessions.
While consolidations are quite healthy for bull markets but resources behind current indecisiveness is coming out of uncertainties fuelled by media hypes going towards Assembly Polls in Himachal Pradesh on 09/12/2017 and in Gujarat in two phases on 09/12/2017 and 14/12/2017 with exit poll result is pending on 14/12/2017 (evening) and final poll outcomes on 18/12/2017 (morning). Although, chances of negative surprises are typically less than that of a status quo but speculators are busy enough trying to encash the opportunity given a rally for last 11 months in domestic capital markets.
Nifty 50 has taken a support from 100EMA at 10038.30 currently during yesterday and RSI is indicating a possible reversal in pattern sooner than later with daily is at 33.5296 (vs. recent low of 32.3243 of 27/09/2017), hourly is at 28.7972 and 30 Minutes is at 30.7990 hitting the bottom. In other hand, current PCR too is near the reversal point around 0.83.
Now, a decisive breach of 100EMA at 10038.30 may invite lower levels towards 9857 â€“ 22 which in turn may even drag towards 200DMA at 9699.33. But, supports around 9973 â€“ 28 are quite strong till now to hold the ongoing fall, unless of a fresh or panic selling comes into the scenario initiated by either domestic issues discussed or global trend (if any) arising out of a possible pre-Christmas/year end profit booking and or of a sudden spike in energy prices. While, in case of a reversal holding the current support is expected to face resistances towards 10167 â€“ 82 and will not be confirmed unless beyond 50EMA at 10197.74. On confirmation, an upward surge will retest 10490.45 with foreseeable target of 10765 on cards.
Hence, an investor may use the opportunity to bargain value picks at comparatively lower prices while a trader needs to stay alert with strict stop loss in hands on either direction with an idea of direction and the possible extent.