Technical & Derivatives Report
O
Tuesday’s lackluster session was followed by a gap up opening in
our market on the back of favorable global cues. The banking
index continued its strength and moved closer to the 25000
mark. However, all of a sudden the entire market just took a
nosedive and within a blink of an eye, the BANKNIFTY not only
pare down gains but also slipped inside the negative territory.
The velocity at which markets fell, it was clearly a panic kind of
situation for the bulls. Fortunately, a news flash with respect to
yet another stimulus package from our government applied
brakes on the mayhem and thereafter had a v-shaped recovery to
conclude at the highest point in the last seven months on a
closing basis.
Till the penultimate hour everything looked hunky dory but from
nowhere the volatility spiked up abruptly which was visible in a
massive sell off. But since the undercurrent is strong, any positive
news flow is likely to lift markets higher and this is exactly what
we witnessed in the last hour of the trade. In hindsight, one
would not be able to figure out the mental pain a trader might
have gone through in this short stint but this is how the market
operates.
Exhibit 1: Nifty Daily Chart
Sensex (40707) / Nifty (11938)
Our markets started the session with a gap up opening, courtesy to
the banking stocks which continued with its positive momentum.
The midcaps too joined the upmove and thus, it looked that the
index will take out the 12000 mark easily to kick start the next leg
of upmove. However, in the later half, the index suddenly
nosedived and within no time, Nifty sneaked below 11800 from
12000 mark. But it was not over yet, the index showed a V-shaped
recovery in the last hour and ended this highly volatile session well
above 11900.
Till noon, it seemed that the index is finally geared to resume its
uptrend above 12000 as banking pack as well as the broader
markets were going up quite well. However, many times we have
seen that when things look quite easy, market tends to give some
reality check and that is what we witnessed during the day. The
intraday volatility mostly sidelined the weaker hands and the bulls
continued to dominate at the close. Due to the sharp recovery in
the concluding hour, 11800- 11775 continues to be an important
support, and till this is defended, one should continue to maintain a
positive stance. On the higher side, 12000-12025 certainly has
attracted some profit booking recently but once we see a breakout
above the same, the broader markets would then provide good
Exhibit 2: Nifty Bank Daily Chart
At this juncture, it is advisable to keep a track on the above
mentioned levels. While the banking space continued its
momentum, some other sectors such as Real Estate and Cement
too witnessed good buying interest. Traders are advised to find
look for opportunities in such sectors with good momentum for
better returns.
.Key Levels
Support 1 – 11800 Resistance 1 – 12000
Support 2 – 11775 Resistance2 – 12025
Now technically, the banking index has managed to maintain its
sturdy posture and looking at the daily ‘RSI-Smoothened’
placement above the 70 mark, 24850 – 25000 looks on cards. On
the flipside, 24400 – 24200 remains to be a strong as well as
crucial support zone.
Key Levels
Support 1 – 24400 Resistance 1 – 24850
Support 2 – 24200 Resistance 2 – 25000