Oct 19,2020-Expect a quiet start for Nifty on Monday; 11,800 and 11,865 immediate resistance points.
In the previous technical note, we had mentioned that some technical pullback may occur as Nifty had witnessed an unreasonably near-vertical decline. While continuing to trade precisely on the expected lines, the Indian equity market threw some technical pullback to end the day with gains.
It is important to note that although the market gave some technical pullback, the upsides have remained measured and limited. This also has been on the anticipated lines. The market is in a broad consolidation range; any upsides will stay limited in its extent and we will continue seeing profit taking bouts at higher levels.
Overall, we suggest traders to continue to approach the market with a cautious approach. Sector rotation is very much visible in the markets and the coming days are likely to stay highly sector and stock specific. The up moves should not be chased as the pullback that was seen on Friday has been on the basis of short-covering, as evident from the reduction of Open Interest that has come with the rise.
It is important that the short covering is replaced with fresh buying before we go all out chasing the up move. While staying stock specific in making purchases, profit should be guarded with every move that is there on the upside.