Technical & Derivatives Report
Nifty Bank Outlook - (20655)
During the last week, the bank index remained under pressure for
the major part. However, on Friday, the bank nifty after a gap down
opening and testing the levels of 19500 bounced back sharply to
eventually end with a loss of 1.8% against the previous week close
at 20655. As mentioned above, we remained hopeful and
expected buying to emerge at lower levels citing the positive
crossover in ‘RSI-Smoothened’ on the weekly chart.
Going forward, we continue to see dips getting bought into and
banking stocks likely to outperform. The key highlight for the past
week has been the outperformance from the mid-size private
banks which rallied 8 - 10% on a day with ease. Traders are advised
to continue to focus on such counters which are likely to give
outperforming opportunities.
Key Levels
Support 1 – 20100 Resistance 1 – 21150
Support 2 – 19800 Resistance 2 – 21375
Exhibit 1: Nifty Daily Chart
During the last week, our markets started proceedings with a
good bump up on Monday, owing to favorable global cues.
However, this ecstasy was short lived as we witnessed a gradual
profit booking thereafter. Until Thursday’s first half, index kept
gyrating in a very slender range but post the deferment of
Supreme Court’s verdict with respect to AGR dues, markets joined
hands with global peers. And since they were trading deeply in
red, the Nifty breached the support of 10000. In fact, things
worsened when US markets plunged more than 5% on Thursday.
This resulted in a massive gap down opening in our markets on
Friday. Fortunately, our markets saw a v-shaped recovery
throughout the remaining part to conclude the day marginally in
the green and thereby restricting weekly losses to a couple of
percent.
Barring last two sessions, our market was undergoing a
consolidation phase, but the range widened a bit towards the fag
end. Broadly speaking, in the midst of all this, our markets retraced
recent up move and managed to reclaim the crucial support of
9900 in a matter of a few trading hours. If you refer to our recent
articles, for us, the trend changing level was 9900 and although it
was breached intraday, we will give more weightage for closing
levels. Nifty has not only reclaimed it on a daily basis but with
Friday’s close, it has been defended on a weekly basis as well.
Hence, we continue to remain upbeat and construe this decline as
a retracement of the recent up move, which was very much
needed to provide the strength for the next leg of the rally. As far
as supports are concerned, 9900 continue to be seen as key
support on closing basis. But with Friday’s move, we can mention
a slightly bigger support zone of 9900 – 9544 for the coming
week.
Exhibit 2: Nifty Bank Weekly Chart
On the flipside, we expect Nifty to again go back to recent highs of
10150 – 10300 or may even head towards 10600 – 10800 levels.
One of the key rationales behind this hypothesis is the overall
positioning of the Bank Nifty. Couple of weeks back, we could see
confirmation of a positive crossover in ‘RSI-Smoothened’ on the
weekly chart. Historically it's proven that when this kind of crossover
happens in this oscillator, it has the tendency to give bigger moves
and hence, this observation is adding conviction to our optimistic
stance. Also, it would be unfair not to throw some light on the
‘Midcap’ index, which has given a remarkable move on Friday and
thereby indicates a strong move in the offing.
Key Levels
Support 1 – 9900 Resistance 1 – 10075
Support 2 – 9830 Resistance 2 – 10150