Markets witness corrective phase, but important supports intact

Our markets started Tuesday’s session on a positive note following positive cues from the global markets. However, the indices gave up the intraday gains in the later part of the day and Nifty ended the day above 21500 with marginal gains while the Bank Nifty index ended with a loss of about half a percent.

We had a positive opening based on global cues, but the indices were corrected in the later part of the day. The RSI oscillator on both the Nifty as well as the Bank Nifty index has given a negative crossover recently from the overbought zone and the FIIs too have reduced their net long positions from 70 percent to 62 percent in the last few sessions. However, they bought index futures in Tuesday’s session and their positions are not long heavy here, indicating further room for long formations. The current down move indicates a corrective phase in the index, but since the important supports are still intact in the Nifty, it should be seen as a correction within an uptrend. The immediate support for Nifty is placed around 21500-21450 followed by the 20 DEMA support which is placed around 21370. It would be crucial to see if we see any buying interest again as the index approaches the support zone around the average. In the options segment, 21700 call options have seen rise in open interest and hence, that would be seen as the immediate resistance for next couple of sessions. Traders are advised to avoid aggressive longs until we see signs of a resumption of the up move and one should have a close tab on the index movement in 21400-21370 zone.