Technical & Derivatives Report
Bank Nifty started on a mild positive note and it then slipped lower
immediately in the first few minutes. This dip however got bought into
due to the rub-off effect from the previous session to surpass the
levels of 24000. However, the weakness in the global markets
triggered a sharp sell-off in the second half to eventually end with a
loss of 3.36% at 23072.
Yesterday's fall was unexpected especially after the strong upmove
seen during the last hours of the previous session. With yesterday's
fall, the prices have slipped below the previous session low and the
bulls have definitely lost the momentum. However with the last two
sessions strong swings on both sides the volatility has definitely
increased and it would be unwise to immediately take this as a
reversal. Since the fall has been triggered by a global scenario it would
be better to wait for further clarity and volatility to settle down. Hence,
traders are advised to avoid aggressive positions and better stay light.
The important levels to watch out for will be 22730 and 22310 as
support whereas on the flip side 23388 and 23630 is the immediate
Support 1 – 22730 Resistance 1 – 23388
Support 2 – 22310 Resistance 2 – 23630
Exhibit 1: Nifty Daily Chart
Sensex (39728) / Nifty (11680)
Despite unfavorable global cues, we kick started the session at the seven
month high above 12000. However this gap up opening turned out to
be a formality as we came off sharply in the initial trades. Markets
stabilized from the hiccup; courtesy to complete recovery in banking
stocks. Once again, this rebound got sold into which then became a
nightmare for the bulls post the mid session as markets took a complete
nosedive on the fears of a second wave of coronavirus hitting major
European countries. This resulted in a similar trading session we
witnessed on 31st August to mark more than a couple of percent losses.
Wednesday’s smart recovery in the last hour was extremely encouraging
and suggested an extension of the move. But global sell off poured
complete water on this optimism and before anyone could realized, we
were back to sub-11700 levels. Now, purely looking at charts, this down
move should only be interpreted as a pull back towards the recent trend
line breakout points. This coincides with the 20-day EMA level of 11600.
Hence, all eyes would be on this level in the forthcoming session.
However, since the fall has to do with the global uncertainty, it would be
important to see how things pan out there and if things worsen, we may
see the market correcting further. A close below 11600 would result in
an extended fall towards 11450 – 11350 levels. And if things settle down
and Nifty manages to hold 11600, we may see our markets resuming
the recent uptrend. For the coming session, 11822 – 11900 is likely to
act as intraday resistances.
Exhibit 2: Nifty Bank Daily Chart
There are a lot of ifs and buts at the end of
hence, better to wait for further development to get the clear direction
for next few sessions. Sectorally, IT was one of the leading sectors in the
last few weeks but yesterday it was the first one to trigger the selloff.
Also, banking space disappointed yesterday after Wednesday’s
stupendous move. The midcap index continues to underperform and
yesterday, when stronger pockets gave up, the midcaps had to correct
sharply. At present, traders are advised to stay light and keep a close
track on all the above scenarios.
Support 1 – 11600 Resistance 1 – 11822
Support 2 – 11540 Resistance2 – 11900