Following a very volatile first day of the week, Tuesday’s session was quite an antidote to the previous session. Amid a limited range movement, the Indian equity market consolidated while resisting to key levels and ended the day on a flat note.
Nifty resisted the 12,000 level once again and stayed below that. This level continues to hold the maximum concentration of Call Open Interest as of now, indicating strong resistance at this point. The level of 11,950 also witnessed a good amount of Call writing. This makes 11,950-12,000 resistance zone for Nifty in the short-term.
Wednesday's session is likely to see a tepid start with the levels of 11,980 and 12,020 acting as resistance points, while support will come in at 11,880 and 11,810 levels. In the event of any corrective move, the trading range is likely to get wider than usual.
Overall, the market is showing distinct signs of fatigue at current levels. The zone of 11,950-12,000 is a potential resistance zone, as indicated by the weekly options data. While the IT pack continues to outperform, pharma appears to be taking a breather.
The action in the market has got highly stock-specific, and it is likely to remain so in the immediate short-term. We recommend avoiding excessively leveraged exposures and approach the market cautiously.