Overbought signals emerge as Nifty maintains bullish streak
Nifty futures at Gift City trading indicate further momentum for Indian stock markets. Analysts expect the consolidation phase to continue for benchmarks, though the broader markets will witness some correction. According to them, the lack of domestic cues will keep market participation low.
At the start of September, Nifty has shown a strong bullish trend with 13 consecutive higher closes, forming higher highs and higher lows. However, technical indicators like RSI at 70 and Stochastic RSI at 100 suggest the market is in the overbought zone, indicating a potential for a small correction or profit booking from its all-time highs, said Mandar Bhojane, Technical analyst, Choice Broking.
Open Interest (OI) data shows the highest OI on the call side at the 25,500 and 25,700 strike prices and on the put side at the 25,000 strike price. This data, coupled with the overbought conditions, hints at a possible correction in the September series. Investors and traders can hold their positions and trail their stop loss (SL) for potential upside movement, he further said.
According to Osho Krishan, Senior Analyst – Technical & Derivatives, Angel One Ltd, the gravity-defying winning streak of the bulls looks enticing, but the trading range and market breadth certainly showcase exhaustion. Additionally, the technical parameters are very much compliant with over-bought parameters, and hence, a cautious stance with regular profit booking is advisable at the current juncture, he said. “Going forward, it is advisable to take a pragmatic approach and refrain from getting carried away by the Nifty’s winning streak. Maintaining exclusivity while stock selection and staying light on positions is recommended. Furthermore, closely monitoring the global markets, which have significantly impacted our market’s initial tone, is essential,” he added.
Meanwhile, most Asian stocks are up in early deals on Tuesday.