Contraction will lead to directional move
Contraction will lead to directional move
The divergent market sends mixed signals as Benchmark Index, Nifty, rose to end in green while NiftyBank underperformed to shed 181 points. A rise in Vix kept sentiments muted as rising volatility continues to indicate, tougher times in the short term. The Index opened on a negative basis but it was the buying across the crucial space such as metals adding 5 per cent, energy and PSE gaining 2.5 - 3.5 per cent, added most gains to Nifty to close at 16,793. BankNifty on the other hand remained negative as it was clearly weak due to selling pressure as failed to breach the previous day's high.
The market's positive sentiment can be attributed to Sign of talks between Russia and Ukraine in Belarus while at the same time it is forward-looking to UP election results in the second week of March and also Fed's action in Mid march, but, Technically what we have witnessed in last week is a crucial sell-off that usually accompany short term bottoms as the already expanded volatility contracts to some extent. And that is what we are seeing, the squeeze or contraction will result in the next leg of the directional move. For Nifty upside resistance is placed at 16,000 – 17,020 while support is at 16,410 – 16,300.
(The author is technical analyst Finversify)