Technical & Derivatives Report
Exhibit 1: Nifty Daily Chart
We started off the week with a downside gap due to the weekend
lockdown announced amid COVID surge. Post opening, strong selling
pressure was seen from the word go to drag index below the recent
lows of 32415. As the day progressed, the banking index recovered
slightly and then consolidated for the remaining part of the day to
eventually conclude the day with a massive cut of three and a half
percent.
The BankNifty was the major culprit in yesterday’s free fall as most of
the heavy weight banking names corrected in the range of 3%-6%. As
far as technical chart structure are concerned, we concluded Thursday’s
session near the 89 EMA on hourly chart and things were poised for a
breakout but due to the developments seen in weekend most of the
traders who carried bullish bets found themselves trapped and hence
we saw sharp fall post opening. The BankNifty is now placed around
very crucial levels (around 89EMA in daily chart which recently acted
as demand zone) and follow-up move in today’s session shall dictated
near term directional move. Hence, all eyes especially on banking
index now, traders are advised to remain light on positions until we see
some clarity.
Key Levels
Support 1 – 32300 Resistance 1 – 33000
Support 2 – 32000 Resistance 2 – 33200
Sensex (49159) / Nifty (14638)
We started proceedings for the week on a sluggish note yesterday
morning as indicated by the SGX Nifty. The corrective move extended in
the opening trades to test the 14800 mark. However this correction
eventually turned into a sell off as we saw index literally falling like a pack
of cards at the stroke of the first half an hour. Within a blink off any eye,
we were considerately off highs to enter a sub-14500 territory.
Fortunately, the fall arrested around the mid-session and there after we
had a modest recovery to trim some part of early losses. At the end, Nifty
managed to reclaim 14600 by concluding the session with more than
one and half a percent cut.
Last Thursday when we concluded the truncated week, things were
bright and participation was good across the board. But developments
over the weekend with respect to COVID-19 seems to have dented
traders’/ investors’ sentiment and as a result, we had a sharp selloff in
the first half yesterday. The Dow futures and few Asian bourses were
trading quite firm; but this became like an illusion for our traders as we
kept sinking right from the word go. The major culprit in yesterday’s fall
was undoubtedly the financial space and it’s now placed at a major
support zone, which can now be treated as a ‘Make or Break’ level for
the BANKNIFTY in the near term. So, from here on all eyes would be on
banking index as it can become a deciding factor for the near term trend.
If it manages to hold this, we can see some recovery in the market;
however the way things are positioned, a breakdown in the financial
space can lead to extended correction in the market.
Exhibit 2: Nifty Bank Daily Chart
As far as levels are concerned, we had mentioned how
for Nifty to surpass 14900 in order to regain strength. Unfortunately,
this didn’t happen and we slid from the sub-14900 levels only.
Yesterday’s late recovery was mainly led by the IT heavyweights but it
cannot single-handedly lift the market higher continuously. Till the time
banking does not participate, the bounce back will not be sustainable in
Nifty and hence, for the coming session, 14680 – 14750 are to be seen
as immediate hurdles. On the flipside, 14550 – 14440 are to be
considered as supports. Traders are advised to stay light and avoid
taking contradictory bets till the time volatility does not subside.
Key Levels
Support 1 – 14550 Resistance 1 – 14680
Support 2 – 14440 Resistance2 – 14750