Technical & Derivatives Report
The banking index too opened flat along with the benchmark
index. However as the day progressed, we witnessed good buying
momentum in Nifty; courtesy to some of the heavyweights like,
RIL, HDFC, IT and Auto counters. The BANKNIFTY too extended its
gains a bit; but relatively it underperformed the benchmark index.
For the major part of the day, BANKNIFTY remained in a
consolidation mode to add nearly four tenths of a percent gains.
Monday’s corrective move has completely been engulfed and
markets are trading in a positive territory for the week. Yes, the
sentiments across the globe continues to be optimistic and no
negative development is as good as a positive trigger for the
market. Hence, we are seeing good buying momentum in last
couple of days. However, for BANKNIFTY 32700-33000 remains to
be a strong resistance and till the time it’s not crossed, 32700 –
32000 remains to be an immediate range. Let see how things pan
out on the penultimate weekly expiry day. Traders are advised not
to get carried away and should stay light on positions.
Support 1 – 32200 Resistance 1 – 32700
Support 2 – 32000 Resistance 2 – 33000
Exhibit 1: Nifty Daily Chart
The Nifty index opened on a flat note and gradually moved higher
during the day to register new highs. In just a couple of sessions, the
index recovered all its losses of the recent correction and has ended
the day tad below 14650.
The index continued its previous day’s upmove yesterday supported
mainly by the IT heavyweights. The Auto stocks and the heavyweight
Reliance Industries too contributed and participated in the upmove.
Although, the Banking index consolidated in a range yesterday and
relatively underperformed the Nifty as no significant momentum was
seen in the private sector banking stocks. If we look at the recent
chart of Nifty on the daily time-frame, it is seen that the 20-day EMA
has acted as a support on intermediate declines and the index has
continued its ‘Higher Top Higher Bottom’ structure. With last two
days of upmove, this moving average support now coincides with
Monday’s low of 14222 and thus, it now becomes a sacrosanct for
the short term. Apart from this, the Nifty Midcap index had seen
some correction from its important level as per the retracement
theory and hence, it would be crucial to see if this index surpasses
its swing high with an ease. In case the midcap index does not break
this hurdle, then we could see some volatility again in the short term
and hence, traders should keep a close tab on this index.
Meanwhile, we continue with our advice for traders to keep focusing
on stock specific moves and identify the sectors which are showing
momentum on a given day. Traders should also avoid taking
leverage positions at this juncture and focus on timely exits on the
trading positions. The intraday supports in Nifty for the coming
session are placed around 14535 and 14490 whereas resistances are
seen around 14710 and 14770.
Support 1 – 14535 Resistance 1 – 14710
Support 2 – 14490 Resistance2 – 14770
Exhibit 2: Nifty Bank Daily Chart