Technical & Derivatives Report
Nifty Bank Outlook - (22199)
Our markets have been unstoppable since last few days, however
the banking index seems to have taken a pause and again, it
started underperforming the benchmark index. Yesterday also
after a good head start, although the broader market was buzzing,
the banking index cooled off from higher levels and eventually
erased some portion of gains.
As per our weekly commentary, we have advocated lightening up
positions (in index) in the ongoing rally, at least for momentum
traders. But by no means, we advice going short, because the
overall momentum in the broader market is extremely strong. In
fact, the Bank Nifty is standing at an interesting point. A breakout
beyond 22500 would trigger a strong upward bias to push the
entire markets higher from the current levels as well. However, in
case if Bank Nifty slides and stays below 21700, this will apply
brakes on the ongoing momentum and then the banking space
would be the first one to experience strong profit booking. Hence,
next couple days would be quite crucial for our markets.
Support 1 – 22000 Resistance 1 – 22350
Support 2 – 21700 Resistance 2 – 22500
Exhibit 1: Nifty Daily Chart
Sensex (36487) / Nifty (10764)
Following the positive cues from the Asian bourses, our markets
started trading for the week with a gap up above the 10700 mark.
The index continued the momentum and tested 10800 as well
during the day, before settling with gains of about one and a half
percent at 10764.
The indices continued its northward journey and rallied to test the
10800 mark yesterday. Although the index traded within a range
post the gap up opening, the biasness was clearly positive as
stocks from the broader markets witnessed good momentum
throughout the day. Many stocks from the cash segment
witnessed sharp upmoves supported by higher volumes, thus
providing good opportunities for traders. If we look at the index,
Nifty has now approached the resistance zone of 10800-11000
which coincides with the ‘200 SMA’ on the daily chart. However,
so far, there are no signs of reversal and hence, one should avoid
taking any contra bet. With yesterday’s gap, 10700-10630 will
now be seen as the immediate support for the index.
Support 1 – 10700 Resistance 1 – 10830
Support 2 – 10630 Resistance 2 – 10900
Exhibit 2: Nifty Bank Daily Chart
The Nifty Midcap50 index has surpassed its swing high and its ‘200
SMA’, indicating that stocks from the midcap space could continue
to provide good opportunities for momentum traders. Hence,
traders are advised to look for stock specific opportunities at the
moment. Also, it is advisable not to carry heavy positions overnight
till we surpass the immediate hurdle of 11000.