For the next trading session and beyond, Nifty will continue to face stiff resistance in the 10,300-10,350 zone. Any significant upside is unlikely unless the index moves past this level.
The volatility index inched higher slightly by 1.88 percent to 30.2050. In all probability, the market has halted its sharp short squeeze. Any more upside until the 10,350 level will create a weakness at higher levels.
On Wednesday, the market is likely to see a tentative start, with the 10,090 and 10,160 levels acting as key resistance, while supports will come in at 10,000 and 9,910 levels.
All in all, the market is likely to act in a tired state of mind. Despite the liquidity-driven rally, the market is exhibiting signs of exhaustion over the past few sessions and will continue to do so in the short term. We recommend continuing to use all pullbacks from now on to make exits and protect profits at higher levels.
As long as Nifty stays below the 10,300-10,350 zone on a closing basis, it remains vulnerable at higher levels.