Technical & Derivatives Report
The Bank Index as well started on a weak note and then it
witnessed choppy moves within a range to end with a loss of 1.12%
On the daily chart not much has changed as prices for the seventh
consecutive session continue to trade within a range of 22000 and
22800. We reiterate our view that the directional move can only
be seen on a breakout from either side of this range. We sense the
breakout is likely to be seen in the next few sessions. A break below
22000 can drag the bank index further lower towards 21630 -
21400 levels whereas a breakout above 22800 can trigger 23100
- 23450 levels. Traders are hence advised to be vigilant on the
above levels and trade in the direction of breakout for a trending
Support 1 – 22100 Resistance 1 – 22550
Support 2 – 22000 Resistance 2 – 22800
Exhibit 1: Nifty Daily Chart
Sensex (38980) / Nifty (11516)
Yesterday morning, the global markets looked nervous and hence,
we were about to open lower after Wednesday's smart move. The
SGX Nifty was indicating a start below 11500 with more than 100
points cut; but fortunately, Nifty did not open in line with what SGX
was indicating. In fact, post the initial hiccup, markets stabilized and
recovered a bit. However, the global weakness eventually weighed
down heavily and we corrected towards 11500 around the midpoint.
Post this, some volatile swings were witnessed in a range of 50 points
to eventually conclude the weekly expiry tad above the 11500 mark.
Although, yesterday's weakness in our market has to do with the
global cues, we are not surprised with it. Despite a strong tail end
surge on Wednesday, we avoided longs and had mentioned the
configuration of the 'Bearish Wolfe Wave' pattern on the hourly
chart. The observation has certainly proved its significance yesterday;
but honestly speaking, yesterday's correction was nowhere close to
a sell-off, rather can only be interpreted as a small profit taking. But
having said that we continue to remain cautious and still do not
expect the Nifty to surpass the sturdy wall of 11650-11700 soon.
Going forward, 11480-11450 would be seen as crucial support and
a move below this would trigger some decent correction thereafter.
Also, we would like to draw attention towards the 'US Dollar Index'
which has corrected significantly in the last couple of months.
Recently, this index has formed a base around the 92 mark and is
now about to surpass the key hurdle of 93.60-94. Since US Dollar
Index and Equity markets are inversely correlated, any surge in this
would lead to correction in our markets. Hence, it is important to
take a note of this development as well.
Exhibit 2: Nifty Bank Daily Chart
As far as individual movers are concerned, we did not see any
broader market sell off yesterday. There were a number of themes
who were bucking the trend throughout the day. But we still advise
caution and even if one wants to participate in such potential
movers, avoid aggressive bets and look to book timely profits or exit
if it does not turn out to be a favorable trade.
Support 1 – 11480 Resistance 1 – 11600
Support 2 – 11450 Resistance2 – 11650