After market hours, the Reserve Bank of India’s Governor Shaktikanta Das announced a couple of liquidity measures. The expectation was that of a rate cut, which was in line with global central banks. The market is likely to react to this on Tuesday.
In Monday’s session, volatility index or India Vix surged 14.38 per cent to 58.88. Dalal Street will continue to see volatility remaining ingrained in trade even if the market attempts a feeble pullback.
Tuesday’s session is likely to see 9,255 and 9,390 levels act as resistance. Support may come in at 9,100 and 9,015. The trading range is expected to stay wider-than-normal over the next couple of sessions.
The Relative Strength Index (RSI) on the daily chart was at 18.87 and stayed in the oversold territory. The indicator also showed a mild bullish divergence, as it did not make a fresh 14-period low, while Nifty did so. The daily MACD remained bearish and traded below its signal line.
As per pattern analysis, Nifty is showing a dismal picture, as the pullback, which was witnessed on Friday, halted exactly near the gap that the index has formed. Besides this, despite trading oversold on the short-term charts, the index is showing signs of vulnerability at current levels, even if it attempts a technical pullback.
The market will continue to remain dominated by global developments going ahead.
At 9.45 pm IST, Dow Jones was trading 1,660.43 points or 7.16 per cent lower at 21,525.19. If we analyse Indian market in isolation, it is due for some technical pullback. However, a rebound will not happen if global markets continue to remain weak.
No doubt, there will be some tempting levels that would trigger an urge to make bargain purchases. Even though the traders may consider making small purchases at lower levels, any aggressive purchases should be avoided entirely unless the market consolidates and shows a few signs of a potential bottom formation.
(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])
