Technical & Derivatives Report
BankNifty aswell started on a positive note on Monday however
it witnessed selling pressure at higher levels to trade choppy for
the major part of the session. Eventually, in the last hour, a strong
selloff was seen to erase all morning gains to end around Friday's
close with negligible change tad at 31200.
In our previous outlook, we had mentioned a double top
breakdown and any bounce likely to get sold into. This is what
we exactly saw on Monday when the bank index witnessed a
bounce the breakdown level acted as a stiff barrier. Going ahead,
we sense the bank nifty is likely to remain under pressure and
any bounce is likely to get sold into. Traders are hence advised to
keep positions light and avoid undue risk ahead of the key event.
As far as levels are concerned, immediate support is placed at
30900 - 30450 levels whereas resistance is seen around 31700 -
Support 1 – 30900 Resistance 1 – 31700
Support 2 – 30450 Resistance 2 – 32000
Exhibit 1: Nifty Daily Chart
Sensex (48348) / Nifty (14239)
Monday morning, the global set up was just ideal to have a good
head start for the final week of the January month. However, within
few minutes of trade, market skidded sharply to not only pare
down all gains but also entered a negative territory. For the
remaining few hours, Nifty gyrated in a range with higher volatility
and eventually managed to extend losses in last couple of hours to
close tad below the 14250 mark.
On Friday, markets had hinted towards some weakness and the
bears used Monday’s gap up opening to add bearish bets at higher
levels. The major culprit in Monday’s sell off was RELIANCE, after its
quarterly numbers along with few financial stocks. However, the tail
end correction was mainly led by the sudden nosedive in few IT
heavyweights. The banking had a solid knock on Friday, which has
already weakened its short term trend and Monday, Nifty had a
catch up move to this. At the close, Nifty is placed at crucial swing
low of 14222, which remained unbroken on a closing basis.
However, the way charts are shaped up, the possibility of sliding
below this level is quite high to test 14100 – 14000 levels. On the
flipside, 14360 – 14500 are likely to act as Immediate hurdles.
We continue with our cautious stance on the market and as
mentioned in the previous commentary, traders are advised to stay
light on positions. Generally, market does not give any major trend
reversal ahead of the mega event; but this time, it looks like we are
going to witness yet another unprecedented behaviour of the
market. Next couple of days would be quite crucial and would be
interesting to see whether markets correct further or it shows some
resilience to protect it’s crucial supports.
Support 1 – 14100 Resistance 1 – 14360
Support 2 – 14000 Resistance2 – 14500
Exhibit 2: Nifty Bank Daily Chart