Technical & Derivatives Report
Bank Nifty as well started on a positive however it lacked follow up
buying and crept lower. Subsequently, during the second half, the
selling got aggravated as the bank index ended with deep cuts of
1.68% tad at 22100.
Once again the bank nifty turned to be a spoilsport as even though
the breadth was positive it dragged the benchmark lower due to
its underperformance. On the daily chart, the bank index has
closed in the vicinity of the strong support that we have been
mentioning for the last few sessions. We sense if any bounce has
to come then it needs to be from the 22000 levels or else we may
see further downside in the near term towards 21630 - 21400
levels. On the flip side, the last three sessions high in the range
22600 - 22800 remains an immediate resistance zone and for a
broad-based buying in banking stocks, it needs to be crossed.
Traders are advised to keep a tab on the above levels and trade
Support 1 – 22000 Resistance 1 – 22600
Support 2 – 21630 Resistance 2 – 22700
Exhibit 1: Nifty Daily Chart
Sensex (38757) / Nifty (11440)
The global set up was just ideal yesterday morning to have a head
start for the new trading week. We began convincingly above 11500
and then slipped into a consolidation mode for the major part of the
session. However post the mid session, the benchmark took a
nosedive and within a blink of an eye, we not only pare down gains
but also sneaked well inside the negative territory. Fortunately a
modest recovery at the end reduced the damage on a closing basis.
Practically, post the opening, nobody was even bothered looking at
indices; because lot of stocks from the broader markets just took off
right from the word go. As far as index movers are concerned, the IT
space took the charge yesterday and witnessed some stellar moves
throughout the day. However, the banking looked a bit tentative
post the initial up move which was very short lived. In fact, post the
midsession, banking stocks came off sharply and turned out to be
spoilsport along with the recent mover RELIANCE, who witnessed
some profit taking yesterday. As a result of all this, the Nifty corrected
precisely after entering a strong resistance zone of 11550 - 11650.
On the flipside, 11400-11350 would be seen as crucial supports.
Support 1 – 11400 Resistance 1 – 11550
Support 2 – 11350 Resistance 2 – 11585
Exhibit 2: Nifty Bank Daily Chart
The kind of sudden fall we witnessed yesterday, clearly suggests that
we are still not out of the woods and hence, it’s a kind of reality check
for complacent buyers that we are going to see at regular intervals
till the time uncertainty gets eliminated. Hence, it’s advisable to
continue with a stock specific approach but at the same time, it’s
important to take timely profits and avoid aggressive bets overnight.