Technical & Derivatives Report
After massive sell-off on Wednesday, SGX Nifty was suggesting
cheerful start on the monthly expiry day and inline to this BankNifty
opened tad above 33400 mark. However, the buying interest was
lacking from the word go and hence we saw meaningful selling to
sneak almost towards 32400. All of a sudden in the midst, sharp
recovery was seen to recoup all the intraday losses and in fact
extended the upmove towards 33550. But, due to final hour selling at
higher levels BankNifty concluded the day around 33000 mark.
Technically speaking, index has precisely rebounded from the 89 EMA
in the daily chart which is a positive indication for Bull’s. At the same
time, we saw index testing the falling trend line support in the hourly
chart and then while recovery managed to conclude above same.
Hence, it is very important to see how the banking index behave from
hereon as the broader market still looks weak. As far as levels are
concerned, 33400-33500 should be acting as immediate hurdles;
whereas, around previous day’s lows (32415.25) is the demand zone.
Support 1 – 32400 Resistance 1 – 33400
Support 2 – 32300 Resistance 2 – 33500
Exhibit 1: Nifty Daily Chart
Sensex (48440) / Nifty (14325)
The global cues were slightly positive in the morning and as a result, our
markets too opened marginally in the green. However, the opening lead
just disappeared within a blink of an eye to sneak below the 14500 mark.
In fact, as the day progressed, things became worst as we went on to
first breach the recent swing low of 14350.10 and then even enter a sub-
14300 territory for the first time after the ‘Budget day’. The action was
not done yet because the real beast ‘Volatility’ was yet to show its
existence on the expiry day. At the stroke of the mid-session, market
started rebounding sharply, especially the banking space as it had
recouped all gains to trade in the green. But again the pendulum swung
in favour of the bears as Nifty once again corrected back to morning
lows and BANKINIFTY trimmed half of its recovery. Eventually, the last
series of the Financial Year ended at two month’s low tad above 14300.
After the recent consolidation, the market has finally started feeling
some heat in last couple of sessions. Fortunately we remained a bit
adamant and did not get carried away by the in between upswings. We
continue to remain cautious and the way we are placed on the charts,
further correction cannot be ruled out. As far as levels are concerned,
the next key support is visible in the zone of 14140 – 14000 as it
coincides with the daily ’89 EMA’ and the 78.6% retracement of the up
move from 13596.75 to record high of 15431.75. On the upside, 14440
followed by 14535 would be seen as immediate hurdles.
Exhibit 2: Nifty Bank Daily Chart
Here the only tricky point is the placement of the banking index. It has
already corrected in line with our expectations and has underperformed
our benchmark significantly in the recent past. This space saw massive
recovery in the latter half after precisely testing the ’89-EMA’ level of
32420. This level coincides with the previous breakout point on the
budget day. Hence, it would be really interesting to see how it behaves
going forward. If it fails to show any strength here, we should then gear
up for an extended correction. In the bull-case scenario, it’s located just
at the right junction from where it can take a U-turn. Let’s see how things
pan out because the other sectors too started participating in the
correction and the broader market which has been convincingly
outperforming, started to see some decent profit taking.
Support 1 – 14140 Resistance 1 – 14440
Support 2 – 14000 Resistance2 – 14535