Technical & Derivatives Report
Nifty Bank Outlook - (20390)
Post the sharp upmove in the last few sessions, Bank Nifty retraced
yesterday and traded with a negative bias throughout the day to
end with a loss of over 500 points.
In Wednesday's session, the index had formed a 'Gravestone Doji'
pattern on the daily chart which is termed as a reversal pattern.
The follow up correction yesterday post the formation of the
mentioned pattern does not augur well and has applied brakes to
the momentum. On pullback move, the resistance for the index is
seen around 21127. While there could be intraday pullback move,
index could again see some underperformance in the near term.
Hence, traders are advised to avoid aggressive bets in this space
and be stock specific from a swing trading perspective. The
immediate support for the index are placed around 20120 and
19550.
Key Levels
Support 1 – 20120 Resistance 1 – 21000
Support 2 – 19550 Resistance 2 – 21127
Exhibit 1: Nifty Daily Chart
Sensex (33981) / Nifty (10029)
Wednesday’s tail end correction was followed by a flat to negative
opening yesterday, as indicated by the SGX Nifty. In the initial
trade, the Nifty tried heading towards 10100, but this short spurt
immediately got sold into. In fact, the selling aggravated across
the board led by the banking conglomerates once again to test
the sub-9950 levels on Nifty. Fortunately, the mentioned support
of 9900 acted as a sheet anchor and in the last couple of hours of
trade, Nifty gave a smart recovery to reclaim the 10000 mark on
a closing basis.
Yesterday, although we saw some follow through selling,
fortunately the damage was not so big to dent the recent
optimistic rally. But if we observe the overall action meticulously,
we could see complete divergence in two most tradable indices,
Nifty and Bank Nifty. The Nifty was in a process of recovering in
the last couple of hours on the weekly expiry day (courtesy to IT
space); but on the other hand, the Bank Nifty had its own plans.
The banking index was completely unmoved and eventually
ended with a decent cut. In our sense, whatever decline or profit
booking we witnessed in the last two days, it was necessary and
would be construed as a healthy sign if we have to extend the
recent rally. For Nifty, momentum traders holding longs should
now maintain a strict stop loss below 9900, in fact the same can
be used to create fresh positions as well. As long as we are holding
this support, the possibility of extending this rally towards 10150-
10200 or beyond, cannot be ruled out.
Exhibit 2: Nifty Bank Daily Chart
As we alluded in the previous article, the low hanging fruit is already
gone, and the easy trade is no more now. Market is going to test the
patience, emotions of traders from hereon, because the move is not
going to be as smooth as it has been in the recent past. Hence, one
should avoid aggressive trades and rather wait for apt levels to reach
to enter into a trade. Moreover, recently the stock specific trades
were also quite easy to spot; but now there also one needs to be
very fussy, because we have started witnessing a lot of whipsaws.
Key Levels
Support 1 – 9950 Resistance 1 – 10150
Support 2 – 9900 Resistance 2 – 10200