12 Oct,2020-Nifty might see profit taking bouts, show resistance at 11,900-12,000 levels.

The domestic equity market posted gains for the seventh straight day on Friday as it went on to end the last trading day of the week on a higher note.

From a technical perspective, the market has ended on a high point. This may cause some minor incremental up move. However, we cannot disregard the fact that in the last two weeks, Nifty has risen 1,000-odd points and stays overstretched on the short-term charts. It would be no surprise if Nifty sees some selling pressure at higher levels or some profit taking bouts is witnessed.

Some broad consolidation from current levels cannot be ruled out. Options data suggests resistance in the 11,900-12,000 zones and these levels will be crucial from the immediate short-term perspective.

Monday's session may see a quiet start to the day. The levels of 11,975 and 12,020 will act as resistance points, while support will come in at 11,860 and 11,800 levels.

Going by pattern analysis, Nifty has taken out the double top resistance that existed between 11,400-11,430 zones. The index has also taken out a falling trend line pattern resistance around the same area. This resistance existed in the form of a trend line that started from 11,800 levels and joined the subsequent lower tops.

Overall, the market has not shown signs of any weakness. Nifty has also not given any negative close, showing likely exhaustion of the trend. However, despite this, some minor cracks in the form of not-so-strong market breadth is seen and some fatigue at current levels is also evident.

Given such a setup, we recommend approaching the market on a highly cautious note and avoid blindly chasing the up move from current levels.

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