SGX Nifty indicates that markets may open in positive terrain!

Nifty closed flat after a volatile day. It settled with 2.15 points gain after a 120-point smart recovery from the day's low and closed at 16,282.25. 

The metal index gained 3.14 per cent while energy, PSU bank and realty indices closed with moderate gains. Pharma index declined 1.46 per cent. Bank Nifty and FinNifty closed with a 0.6 per cent decline each. Mid-cap and Small-cap indices also closed in negative territory. The market breadth was extremely negative with 1,284 declines as against 661 advances.  

The price action of the day formed a small body negative candle with a long lower shadow. Nifty recovered smartly from the day's low, courtesy of metal stocks and Reliance Industries. Nifty opened the day on an optimistic note in positive territory but plunged over 170 points in the first two hours of trading. As the daily trading range increased, another bearish bar formed, with a lower low and lower high candle. The consolidation extended for another day, as expected earlier.  

As Nifty recovered over 120 points from the day's low, the index is showing strength. At the same time, it failed to move higher and was unsuccessful in getting confirmation. Even Wednesday's Doji candle did not get bearish confirmations. As we expected on Wednesday, the consolidation may continue for another two days within the current range. Nothing has changed in the indicators, as the market is in a neutral zone. The positive directional movement indicator i.e. +DMI is declining. Nifty is forming a series of indecisive and bearish bars in the current consolidation, and it is better to avoid taking aggressive positions. Once, it resolves out of the range, we can expect a trending move.   

As far as levels are concerned, the level of 16,140-16,170 is likely to act as strong support while on the upside, the zone of 16,350-16,400 is a strong resistance.