Technical & Derivatives Report
Looking at yesterday's gap down opening, market seem to have
deceived traders on Wednesday by giving a smart recovery in the
last hour to defend the 21000 mark on a closing basis for
BANKNIFTY. Post the weak opening, index kept grinding lower
and in the latter half, it just nosedived to conclude yet another
day with a sharp cut over three percent.
Although, BANKNIFTY reclaimed 21000 on Wednesday, we
continued with our bearish stance and expected it to be
breached soon. In fact, it didn't take much time as we witnessed a
gap down opening below this crucial point. At the mid session,
there was some hint of a bounce back, but it turned out to be a
feeble one. The selling augmented to breach important supports
one by one. With yesterday's fall, 20700-21000 has become a
sturdy wall and any rebound towards it, is likely to get sold into.
On the lower side, soon we expect banking index to slide
towards 20200-20000. We continue to remain bearish but we
would like to highlight that the market is deeply oversold now
and hence, it would not be easy to create short positions at
current levels. Momentum traders are advised to stay light and
should avoid aggressive bets in either directions as we expect
some wild swings to take place on both sides during the day.
Support 1 – 20200 Resistance 1 – 20700
Support 2 – 20000 Resistance 2 – 21000
Exhibit 1: Nifty Daily Chart
Sensex (36554) / Nifty (10806)
The negative global cues weighed down heavily on our markets
yesterday as the Nifty opened gap down and then corrected
throughout the day to end with a loss of almost 3 percent.
It was one of the worst expiry day for our markets in the recent past
as the indices corrected sharply along with the broader market.
There was no respite for any of the index as all the sectors,
including the recent out performers took a sharp knock. The index
has already been in a corrective phase since the start of this month
and Nifty has breached its supports one after another. Nifty has
now approached its ‘200 DMA’ around 10760 which is another
important support. However, as of now there are no positive signs
and hence, we continue with our cautious approach on the markets.
There could be some pullback from here as we have approached
the ‘200 DMA’ which coincides with some important retracement
levels as well. However, markets are likely to face selling pressure
on pullback moves and hence, one should avoid any aggressive
contra trades. The ‘Dollar Index’ which we had recently highlighted
for its breakout has moved higher which too is not good for the
Exhibit 2: Nifty Bank Daily Chart
The immediate support for Nifty is placed in the range of 10800-
10750 followed by 10670, whereas 11000-11100 will be seen as
resistance on pullback moves. Thus, we continue with our advice
for traders to stay light and avoid overnight positions.
Support 1 – 10750 Resistance 1 – 10900
Support 2 – 10670 Resistance2 – 10980