Technical & Derivatives Report
Post the sharp selloff seen on the Budget day, the index started
trading for the week marginally lower. However, the index
managed to find some support near 11600 mark and showed
some pullback during the day to end tad above 11700.
In just a matter of two weeks, the Nifty has corrected sharply from
12400 to almost test the 11600 mark and it tested the '200 SMA'
after mid-October 2019. Around this support, there are other
indicators such as 161% reciprocal retracement of the rise from
11929.60 to 12430.50 and the 50% retracement of the entire up
move from 10670.25 to 12430.50 which coincides in the range
of 11580-11660. Although the market breadth was even-steven
yesterday, many of the recent outperformers from the broader
markets witnessed buying momentum with good volumes which
was a positive sign. Since, the major event is behind us, all eyes
would now again be on the global markets movement and the
upcoming RBI monetary policy. Technically, since we have
already corrected sharply and are now in the vicinity of the
support zone, a pullback move could be seen and hence, traders
are advised to avoid taking a contra call here.
Exhibit 1: Nifty Daily Chart
Bank Nifty Index started on a flat note and after an initial hiccup
bounced back in the remaining part of the session to eventually
end with gains of 0.68% to close back above the 30000 mark.
Post the Saturday's sharp sell-off the bank index witnessed a
bounce back as the hourly oscillators were in the deep oversold
territory and as the bank index approached the key support level
of 61.8% retracement of the recent rally (27568-32613). On the
daily chart, the bank Index has closed tad below the 200SMA
however the way some of the private banks showed strength the
bank index may see further upside in the near term towards
30230 – 30450 mark. On the flip side, support is placed around
29880 – 29500 levels. Traders are advised to have stock specific
long approach from the sector which are likely to give good risk
to reward ratio.
Support 1 – 29880 Resistance 1 – 30230
Support 2 – 29500 Resistance 2 – 30450
Exhibit 2: Nifty Bank Daily Chart
Infact, stocks which are trading near their 52
witnessing good volumes could still provide decent returns in the
near term and thus, traders should look to capitalize on such
opportunities. The immediate support is for Nifty is placed in the
above mentioned range of 11580-11660, whereas resistances are
seen around 11800 and 11930.
Support 1 – 11660 Resistance 1 – 11800
Support 2 – 11580 Resistance 2 – 11930