Technical & Derivatives Report
The starting point of the week gone by was excellent as the pre-
open suggested a bumper opening at records highs on Monday;
courtesy to gap up opening in two major index movers (RIL and
HDFC Bank ) after posting their quarterly numbers over the
weekend. But this ecstasy at the opening was flatter to deceive.
Markets started coming off fiercely right from the word go, in fact
the selling aggravated as the day progressed to conclude with
sharp cuts. This negativity continued for subsequent two sessions
to slide towards the 12100 mark. Fortunately, the mighty bulls
came for a rescue and were successful in pulling the market
higher to end the week well above 12200.
It seems that looking at the recent behaviour, market is giving full
justice to the famous phrase ‘All’s well that ends well’. Technically
speaking, we reversed precisely from a crucial juncture. Firstly,
the support of 12100 was placed at the 61.8% Fibonacci
retracement of the recent up move from 11929.60 to 12389.05
(proper traded high). And second but most important
observation was the convergence of ‘Upward Sloping Trend Line’
drawn by joining recent swing lows with the low of 10670.25.
Now, the forthcoming week would be crucial for our market as
we are heading for one of the mega events, Union Budget slated
on 1st February. So, most probably we are likely to see an action
packed week especially for individual stocks.
Support 1 – 12200 Resistance 1 – 12300
Support 2 – 12150 Resistance 2 – 12390
Exhibit 1: Nifty Daily Chart
During the week gone by, the Bank Index continued with its recent
underperformance in the initial part of the week to mark an intra-
week low of 30614. However, in the last two sessions, it bounced
back sharply to trim some loss and end at 31242 with a loss of
1.10% against the previous week.
On the daily chart, the Bank Index has confirmed a bullish inside
bar pattern and going ahead the bounce back is likely to continue
31430-31600 levels. On the flip side, strong support is placed
around 30800 followed by 30600 which twice acted as strong
support during the week gone by. Ahead of key union budget and
F&O expiry session, traders are advised to have stock specific
action as they are likely to provide better trading opportunities.
Support 1 – 30800 Resistance 1 – 31430
Support 2 – 30600 Resistance 2 – 31600
Exhibit 2: Nifty Bank Daily Chart
As far as Nifty is concerned, we may see Nifty going back to
12300 – 12390 ahead of the budget and a positive outcome
would enable it crossing this sturdy wall of 12400 convincingly.
On the flipside, 12200 followed by 12150 would be seen as a
sacrosanct support zone. Last week we had mentioned about
‘Midcap’ index entering an overbought zone and possibility of
some breather cannot be ruled out. In line with this, initial part
of the week, index remained sideways and was clearly bucking
the trend by not correcting as much as our benchmark did. And
once they settled, the ‘Midcap’ universe resumed its uptrend,
which is likely to extend further.