The Indian equity market again displayed its intrinsic strength on Wednesday as it consolidated and ended on a flat note once again. The market saw a cool start on the expected lines in the first half of the session and traded flat in a narrow range. Nifty remained in a narrow range till noon and did not show any directional trend. A sudden wave of profit-taking gripped the market, as the index fell sharply. However, in the last one-and-a-half hours, Nifty has improved in an equally notable manner and made up for all the losses.
The headline index jumped over 120 points from its lows and ended with a negligible loss of 8.60 points (-0.05 percent).
Thursday’s session will not only see the weekly options expire, but it will also be the last trading day of the week, as Friday will be a trading holiday for Ganesh Chaturthi.
The weekly options data shows an increase in maximum put open interest from a strike price of 17,300 and this level also holds the highest put OI accumulation. This indicates that the 17,300 level is expected to act as potential support if the consolidation continues.
Volatility increased slightly; India VIX rose 3.26 percent to the 14.4100 levels. The relative strength index (RSI) on the daily chart stood at 81.58; It resides in the overbought zone. The RSI also remains neutral as it shows no divergence against the price.
The daily MACD is bullish and remains above the signal line. PPO remains positive.
A Hanging Man emerged over the candles. As this happened after an uptrend and near higher levels, it has the potential to give some respite to the market and see some consolidation. However, any such formation would require confirmation on the next bar.
Pattern analysis shows that Nifty made a very strong breakout above the 15,900-15,950 zone. It is getting higher and higher with intermittent breathing. In the process, it has built up base points at each higher level. The most recent base point is forming near the 17,200 level, making it an immediate support point for the near term.