Technical & Derivatives Report
Nifty Bank Outlook - (23812)
Bank Nifty as well started on a positive note and after trading
volatile within a range ended with gains of 0.24% at 23812.
On Monday, the bank index formed a bearish reversal pattern
known as 'Dark Cloud Cover' on the resistance of 200SMA. The low
of the pattern, however, got defended yesterday at 23385 which
coincides around the previous breakout level (July Swing High) and
formed an indecisive pattern known as 'DOJI'. Going ahead, as
long the low of 'Dark cloud cover' at 23385 holds there are hopes
for bulls for some recovery. Having said that 25000 has now
become a daunting task to break and we may see supply on any
attempt to bounce back in the near term. We sense the bank index
may consolidate in a range 23385 - 24500 for the next few
sessions and within the same opportunities can be seen on both
sides of the trend.
Support 1 – 23385 Resistance 1 – 24125
Support 2 – 23200 Resistance 2 – 24500
Exhibit 1: Nifty Daily Chart
Sensex (38901) / Nifty (11470)
After Monday's sell off, our markets opened higher as the global
rally is still on and yesterday morning. DOW future was trading firmly
in the green. Post the positive start, our markets saw few volatile
swings during the day; but when it comes to the individual stocks,
we witnessed smart recovery in a number of counters. Eventually,
the index ended the session with nearly a percent gain.
Monday's sharp fall might have shaken so many market participants
and it has certainly applied brakes on the recent euphoria.
Fortunately for us, there was no follow through selling seen
yesterday and the Nifty successfully managed to defend the crucial
support of 11325. Since, Monday's correction is the profit
booking move of a strong Bull Run, markets have still not
distorted their structure. So, as long as 11325 is defended, the
momentum traders would still have some hopes of a recovery. If any
weakness has to trigger, it will happen only after breaking this crucial
point. However on the higher side, we do not expect Nifty
surpassing Monday's high soon. Meanwhile, it would be a daunting
task for the Nifty to surpass the sturdy wall of 11550-11650. Let see
how things pan out in the next couple of days, which would possibly
give some idea of the next path of action.
Exhibit 2: Nifty Bank Daily Chart
Going ahead, we continue to advocate some caution and one should
avoid aggressive bets, considering the rise in volatility, Till the time
we are stuck in a range of 11325 - 11650, we are likely to get trades
on both sides and hence, swings traders can capitalise on such
higher volatile moves.
Support 1 – 11400 Resistance 1 – 11550
Support 2 – 11325 Resistance 2 – 11600