Technical & Derivatives Report
Nifty Bank Outlook - (22662)
On Friday, Bank Nifty witnessed a gap down opening and slipped
lower to mark intraday low of 22417. Subsequently, a mild
recovery from the lower levels resulted bank index to end with a
loss of 1.83% at 22662.
As mentioned above, the bank index is likely to play a vital role in
the next leg of the broader market rally and 23000 - 23200 zone
has been the levels we have been advocating throughout the week
as a breakout level. For this week, 23000 - 23200 continues to be
the level on watch as above the same we can expect a strong
outperformance by banking stocks and a continuation of the
broader market rally. On the flip side, immediate support is placed
around 22200 and 22000 levels. Traders are advised to have a
stock-specific approach on banking and NBFC stocks which are
likely to give better trading opportunities.
Key Levels
Support 1 – 22200 Resistance 1 – 23000
Support 2 – 22000 Resistance 2 – 23200
Exhibit 1: Nifty Daily Chart
The stage was set previous Friday when our markets had a late surge
to surpass the recent hurdle of 10850 on a closing basis. Hence, with
global markets showing some favorable cues, we had a cheerful start
for the week gone by on Monday at 11000, marking the highest
level since March 06, 2020. This momentum extended on the
following day as we witnessed yet another gap up opening to extend
this lead. However, post this, markets had some reality checks in
between to remain in a slender range throughout the remaining part
to conclude the week tad below 11200 mark. The banking index was
one of the major charioteers in this extended move, barring Friday,
when banking space has undergone some selling pressure to pare
down a decent portion of their weekly gains.
In continuation of our previous weekly commentary, our desired
levels of 11200 has now been met. But since, there are multiple
technical observations that coincide around it, markets will have a
daunting task in front of them now. Since, we are extremely
overbought, we are in two minds whether to go with the theoretical
characteristic of this term ‘overbought’ or the practical one. Because,
theoretically, the current placement (78% retracement of the post
COVID fall which coincides with 100% ‘price extension’ of recent
swings from March bottom) of market is just ideal to see some
genuine correction; but practically as we all know, market has the
tendency to surprise us all the time. Hence, rather anticipating things
from here on, we would rather let the market give us further
indication. As we step into the monthly expiry week, our eyes would
be on a few crucial levels. On the upside, 11250 is the level to watch
out for; whereas, 11050 has now become a key support.
Exhibit 2: Nifty Bank Daily Chart
As an optimist, one should remain hopeful as long as we are trading
above this swing low (11050) and expect the market to give
breakout in upward direction to extend the move towards 11350 –
11400. However, a breach of lower end should be treated as a short-
term pause to see some decent profit booking. We continue to
advise traders to remain light and keep booking profits wherever it's
necessary. Also, if our markets have to see any upward move, the
banking space plays a vital role in this. Hence, one needs to see
whether BANKNIFTY manages to convincingly go beyond 23000-
23200 or not in this week.
Key Levels
Support 1 – 11100 Resistance 1 – 11250
Support 2 – 11050 Resistance 2 – 11350