Technical & Derivatives Report
Markets can be very unpredictable at times and the price action in
the last couple of sessions completely justifies this statement. The
banking has been dragging continuously for the past few days and
with Monday's fall, the Bank Nifty reached its crucial swing low of
21027. Yesterday in the initial trades, this crucial support was
challenged once again; but from nowhere, the strong buying
emerged at lower levels in few heavyweight banking names, which
pulled the index higher. In fact, it did not stop there, the lead got
extended in the following hours to conclude comfortably at
elevated levels. If we take a glance at intraday charts, yesterday's
move appears to be completely opposite of Monday's fall and it is
always good to see the market rising. As we had stated yesterday
also, if any recovery has to happen it should happen from this
important point only and markets managed to recover. Going
ahead, 21027 remains a major support and till the time it is
defended, there is no reason to worry for. For the coming session,
a move beyond 21576 would extend the relief move towards
21750 - 22000 levels; whereas on the downside, the immediate
intraday support lies at 21300 - 21200.
Support 1 – 21300 Resistance 1 – 21750
Support 2 – 21200 Resistance 2 – 22000
Exhibit 1: Nifty Daily Chart
Sensex (37688) / Nifty (11095)
The index started yesterday’s session marginally positive in line with
the global cues. However, the initial dip in first 15 minutes of trade
was bought into and the index then rallied higher throughout the
day to end with gains over 200 points.
Nifty had ended Monday’s session in the vicinity of its support zone
of 10870-10900, which was the previous breakout level as well as
the ‘200 SMA’ on the daily chart. This support zone played it role
well and the index resumed the momentum yesterday led by the
index heavyweights such as Reliance Ind. and HDFC Bank. Apart
from the index heavyweight RIL, the private banking space too
participated as the Bank Nifty defended its swing low of 21027. With
this pullback, the index continues the ‘Higher Top Higher Bottom’
structure and forms a higher low i.e. a higher support base at 10880.
Thus, the near term continues to be positive now till 10880 remains
intact. Hence, traders are advised to trade with a positive bias and
look for buying opportunities in intraday declines. On the flipside,
11250-11300 would be immediate target zone to watch out for.
Key Levels
Support 1 – 11000 Resistance 1 – 11250
Support 2 – 10900 Resistance 2 – 11300
Exhibit 2: Nifty Bank Daily Chart
Yesterday we mentioned about the positive market breadth in falling
market with midcaps showing a relative outperformance. The
midcap space continued its momentum and now the banking and
financial stocks too could participate to cover up for their recent
underperformance. Thus, we continue with our advice to look for
such stock specific opportunities which could provide good returns
in the near term.