Technical & Derivatives Report
Most of Asian markets were trading in the red in morning citing
the escalation of violence in Hong Kong. As hinted by the SGX
Nifty, our markets started trading for the week marginally
negative. However, our market did not react much to it and then
traded in a narrow range throughout the day to recover the losses
and end with negligible gains.
In this month so far, Nifty has traded in a narrow range of
11840-12000 wherein we have witnessed more stock specific
momentum within this range. During Monday’s session, the
support end of the range was defended and we witnessed
recovery from the intraday lows to end the session almost flat.
Infact, if we look at the other indices, the Bank Nifty showed good
outperformance as the Private sector banking heavyweights
continued with their last week’s momentum which led the Bank
Nifty index to close well above 31000 mark. Now, coming back
to the Nifty index, it’s been eight trading sessions that the index
has consolidated within the range of 11840-12000. This
consolidation could be termed as a time-correction within an
uptrend as there are no signs of reversal as of now. Usually, such
time correction leads to formation of a support base for the next
leg of upmove. Thus, 11840 is now seen as a crucial support and
if this support is breached, then we could see some profit booking
which could drag Nifty upto 11700-11750. On the flipside, once
this time correction is over, we expect Nifty to resume the
momentum to reach its new highs very soon.
Exhibit 1: Nifty Daily Chart
On Monday, Bank Nifty outperformed as it ended with gains over
a precent well above 31100 levels.
As mentioned above, the bank nifty is in stong positive
momentum as the private sector banking heavyweights are
showing strong performance. The bank index has now closed
above the previous swing high formed in September and the
momentum is likely to continue towards 31450-31680 levels in
the near term. Traders are hence advised to keep positive bias
and use dips as a buying opportunity. Immediate support is now
placed around 30750-30600 levels .
Support 1 – 30750 Resistance 1 – 31450
Support 2 – 30600 Resistance 2 – 31680
Exhibit 2: Nifty Bank Daily Chart
In such phase, traders are advised to avoid taking any contra
trades and rather look for buying opportunities in such stocks
which could outperform in next leg of upmove. The Banking
space has shown a leadership and thus, traders should look
for stock specific opportunities in such sector where one could
generate good returns in short term.
Support 1 – 11840 Resistance 1 – 12000
Support 2 – 11750 Resistance 2 – 12103