Technical & Derivatives Report
Nifty Bank Outlook - (20941)
Bank Nifty index too opened higher with another gap and rallied
sharply during the day. The index outperformed the Nifty index as
the stocks from the banking space witnessed sharp upmove. The
PSU Banks outperformed after a long period which resulted in
intraday gains of over 1000 points in Bank NIfty. However,
suddenly there was a sharp sell-off at the end and the index gave
up much of the gains to end the day up by 400 points.
The sell-off in the end has resulted into formation of a 'Gravestone
Doji' pattern on the daily chart. In our yesterday's report, we had
advised to lock profits on long positions as after such a sharp
move in few sessions. The above pattern is a sign of reversal and
the follow up move will be important today. We continue with our
advice to book profits on existing long positions and wait for more
signs/confirmation for fresh trades.
Support 1 – 20700 Resistance 1 – 21600
Support 2 – 20530 Resistance 2 – 21830
Exhibit 1: Nifty Daily Chart
Sensex (34110) / Nifty (10062)
For the third consecutive session, our markets opened with an
upside gap, owing to positive cues from the global bourses.
Yesterday, it was certainly a notable opening because we started
the proceedings convincingly beyond the 10000 mark. In fact, the
buying momentum continued as the day progressed to hasten
towards 10200. However, market suddenly took a nosedive
towards the fag end of the day and within a blink of an eye, we
were considerably off day’s high. In the midst of this, Nifty
managed to close inside the positive territory.
Last couple of weeks have been excellent for our markets and in
the process, we finally reclaimed the five digit mark of 10000.
Yesterday’s extended move was clearly propelled by the banking
space and at one point of time, we could see crazy up move in
Banknifty as if there is no tomorrow. But somewhere market has
to oblige the law of gravity and this is what we saw in last 45
minutes of trade. The BankNifty literally nosedived and within no
time, shaved off sizeable portion of gains. Practically, such in
between reality checks are important for markets as it eliminates
complacent traders from the market.
Support 1 – 10000 Resistance 1 – 10150
Support 2 – 9900 Resistance 2 – 10200
Exhibit 2: Nifty Bank Daily Chart
Now technically speaking, we have seen a series of upward gaps and
hence, yesterday’s can be termed as a ‘Continuation gap’. We hope
the same remains unfilled in coming days, because an immediate
gap filling process will lead to ‘Exhaustion Gap’ and the same
generally applies brakes on the ongoing momentum. We need to
see how market behaves especially BankNifty (because the daily
formation is not encouraging). For Nifty, 10000 followed by 9900
would be seen as crucial supports; whereas on the flipside, it would
be important to surpass 10200 in order to continue this upmove
towards 10400-10600 levels.