Technical & Derivatives Report
Nifty Bank Outlook - (21427)
Our markets started the session on a higher note, owing to
favourable global cues. After the initial up move, the banking
index slipped into a consolidation mode and saw some moderate
swings in a band of 300 points for some time. However post the
mid session, global markets started tumbling and tracking this, our
markets too nosedived considerably in last couple of hours.
Eventually the Bank Nifty ended the session nearly 1000 points
lower than it’s morning high.
The recent rally has been relentless and after reaching a cluster of
resistance, only a small reason needed to take some money off the
table. This was evident and is clearly what we witnessed yesterday.
With yesterday’s move, the daily chart does not look too
encouraging but at the same time, we are in two minds whether
to give importance to ‘Line Chart’ Cup and Handle formation or
yesterday’s bearish candle at a resistance zone. In our sense, to
get the clear picture, we need to assess things for next couple of
sessions. As of now, we remain hopeful as long as 21200-21000
is being held and on the higher side, the up move will get resumed
after seeing a close beyond the 22000 mark again.
Support 1 – 21200 Resistance 1 – 22000
Support 2 – 21000 Resistance 2 – 22200
Exhibit 1: Nifty Daily Chart
Sensex (34869) / Nifty (10305)
The index started trading on a positive note yesterday, however,
after consolidating in a range for first hour of the trade, it
corrected upto 10450 mark. We saw a pullback again towards the
opening level but the Nifty then witnessed a selling pressure for
rest of the session and ended with a cut of about one and a half
percent around 10300.
Post opening on a positive note, Nifty approached the level of
10550 which was the trendline resistance of the ‘Rising Wedge’
pattern on the daily chart. Also, as mentioned in our yesterday’s
outlook, this also coincided with the resistance end of a ‘Wolfe
Wave’ pattern on the daily chart of Nifty. The index precisely
corrected from this resistance yesterday and it ended with a deep
cut and has formed a ‘Bearish Engulfing’ pattern. This pattern, at
the above mentioned resistance point is a cautious signs for the
bulls. Some of the other sectoral indices too have formed a similar
candlestick pattern on their respective charts. The next couple of
sessions would be crucial to see how the market reacts hereon.
Exhibit 2: Nifty Bank Daily Chart
Hence, traders should prefer to stay light on positions for time being
and keep a wait and watch approach. The immediate supports for
Nifty are placed around 10200 followed by 10100 whereas
resistances are seen around 10480 and 10550.
Support 1 – 10200 Resistance 1 – 10480
Support 2 – 10100 Resistance 2 – 10550