Technical & Derivatives Report
The BankNifty index halted trading at 21352 within few minutes
post opening on Friday. However, the index witnessed sharp
upmove when the markets re-opened and it crept higher
throughout the day to end with gains of about 5 percent from the
previous days close. We witnessed erratic movement in the index
on Friday and if we look at the long term charts, then the Friday's
low coincides around the '89 EMA' on the monthly chart, which is
usually considered as a long term support. Ofcourse, it seems
easy to look at the bounce from this support but actually
predicting such move post hitting the lower circuit in the index was
highly improbable. As of now, we would read this as a pullback
move which has already retraced by 38.2 percent of the recent
downmove. If we continue the upmove, then 50% retracement will
be the next probable zone which is around 26500. Considering
the wide movement in the last couple of sessions, the volatility is
likely to remain high and hence, it would be difficult to given
levels for day trading. Traders should look to trade with the
momentum during the day with proper risk management.
Support 1 – 24000 Resistance 1 – 26000
Support 2 – 23765 Resistance 2 – 26500
Exhibit 1: Nifty Daily Chart
During the last week, we had mentioned about this fall
probably a brutal one in last 12 years. Clearly, we are driven
by fear and sentiments on the back of coronavirus pandemic
across the globe. We had a terrible start for the week on
Monday and if we call this worse, then probably worst was yet
to come. On Thursday, benchmarks opened with a deeper cut
and went on to thrash more than 8% at the close. This
extended fall with combination of meltdown in global markets
created complete panic in our markets. This resulted into our
markets hitting a lower circuit of 10% in the opening trades
itself on Friday. Whatever happened that was yet another
incidence of how this market has turned abnormal in nature.
We resumed trading after 45 minutes of halt and before
anyone could realize, markets started rebounding quite swiftly.
Within a blink of an eye, we were considerably off lows and in
fact the upward momentum aggravated as the day progressed
to post biggest ever intraday recovery. In last few sessions, the
INDIA VIX, which is also called as the fear index, has risen
quite sharply and has ended the week above the 50 mark.
Higher the volatility index, market tends to move steeply and
hence, the market is likely to continue with some large swings
in the near term.
Exhibit 2: Nifty Bank Daily Chart
esistance for the index is seen around
the same, then next levels to watch would be around the 50%
retracement mark of the recent fall which is seen around 10400.
On the flipside, 9700 and 9400 would be seen as the immediate
support levels. All eyes would continue to be on the developments
with respect to the Corona Virus cases which is likely to dictate the
near term movement. Traders are advised to avoid leverage
positions and trade with a proper risk management strategy.
Support 1 – 9700 Resistance 1 – 10200
Support 2 – 9400 Resistance 2 – 10400