Technical & Derivatives Report
Bank Nifty started with a gap up opening and marked a fresh
new high at 32683 however it lacked follow-up buying and along
with broader markets it slipped lower for the major part. In the
penultimate hour, buying was seen in some of the heavyweight
banking stocks that pushed the bank index back to the opening
levels to eventually end with gains of 0.73% at 32575.
Yesterday finally the bank index managed to cross the pre-covid
high levels however the follow-up move that was expected was
missing and in fact, prices ended up with a neutral pattern 'Doji'
around this crucial level. Going ahead the movement of the bank
index in the next few sessions will be crucial as if prices manage
to sustain above 32600 - 32700 levels then it can fuel the next
leg of the rally in the broader market. However, if it fails then it
may in fact turn out to be the reason for the long-awaited
correction. Traders are hence advised to be watchful on this high
beta tradable index and trade with proper risk management.
Key Levels
Support 1 – 32150 Resistance 1 – 32700
Support 2 – 32000 Resistance 2 – 33000
Exhibit 1: Nifty Daily Chart
Despite SGX Nifty indicating a flat start early in the morning, our
markets opened with a decent upside gap at record highs well
above 14600. In the initial trade, Nifty marked a new high of
14653.35 and then consolidated for some time. However, post the
midsession, the selling augmented in the market and within a span
of few minutes, Nifty was well off morning high. Fortunately, we
witnessed a smart recovery towards the fag end to conclude the
day on a flat note.
Since last couple of days, although the broader market kept
buzzing, we observed profit booking in individual stocks. Yesterday,
the profit booking mode was seen in so many counters, which
weighed down heavily on the market and thus market had a decent
decline during the day. But similar to recent trend, 2.30 factor once
again played out well in the market, which helped the market erase
its losses completely. Overall it was a day with some decent roller-
coaster move and fortunately due to sheer outperformance from
few banking heavyweights, markets are back to safe terrain. This is
what we have been referring since few days, it’s not going to be
easy ride anymore for traders and one needs to be prepared for
such higher volatility.
Key Levels
Support 1 – 14430 Resistance 1 – 14650
Support 2 – 14400 Resistance2 – 14680
With yesterday’s move, 14650 has become an immediate
resistance; whereas on the lower side, last two day’s low of 14430
has now become a crucial point. Any sustainable move below this
level would provide first sign of weakness. Also, we would like to
highlight some typical behaviour of the market. Since last few days,
we are seeing some intraday dips and those declines are getting
comfortably bought in the last one and half hours of strong buying
mode. Whenever we see this behaviour reversing, traders should
immediately lighten up longs.
Exhibit 2: Nifty Bank Daily Chart