Technical & Derivatives Report
Post Thursday’s smart recovery precisely from 89 EMA in daily chart,
we started-off Friday’s session on an optimistic note tad above 33600.
But, the follow-up buying was really missing and hence BankNifty
began to shed the early morning gains from the word go. As the day
progressed, we hardly saw any relevant price action, the banking index
consolidated in the range of merely 400 points for remaining part of
the day. Eventually, we concluded the day almost a percent higher to
its previous close. If we consider the overall activity for the week, the
BankNifty corrected inline to our expectation and also tested 89 EMA
on daily chart on Thursday. On the same day, sharp recovery was seen
from the important support zone; which is certainly a positive
indication for Bull’s. Hence, it is now important to wait for the follow-
up activity in this week. For Traders, it is advisable to avoid any
aggressive directional bets for the time being. As far as levels are
concerned, 33500-33600 should be acting as immediate hurdles;
whereas, around Thursday’s lows (32415.25) is the demand zone.
Key Levels
Support 1 – 32800 Resistance 1 – 33500
Support 2 – 32415 Resistance 2 – 33600
Exhibit 1: Nifty Daily Chart
Sensex (49008) / Nifty (14507)
The previous Friday’s sharp recovery was followed by a flat to positive
start on Monday, owing to favourable global cues. The lead extended on
the following session after the Supreme Court’s verdict on Loan
Moratorium. However as we alluded to in the intra-week commentary,
the conviction was clearly lacking in the up move, which eventually
resulted in a sharp decline thereafter. Due to mid-week sell off, the Nifty
went on to enter sub-14300 territory for the first time after the Budget
session. However, similar to the previous week, this Friday too brought
some positivity back in to the market as we witnessed a decent recovery
across the board to reclaim the 14500 on a weekly closing basis.
After the recent consolidation, the market finally started feeling some
heat as we witnessed in the week gone by. Fortunately we remained a
bit adamant and did not get carried away by the in between upswings.
We continue to remain cautious and the way we are placed on the charts,
further correction cannot be ruled out. As far as levels are concerned,
the next key support is visible in the zone of 14140 – 14000 as it
coincides with the daily ’89 EMA’ and the 78.6% retracement of the up
move from 13596.75 to record high of 15431.75. Before this, 14400 –
14250 are to be seen as immediate supports. On the upside, the cluster
of resistances is visible at every 100-150 points. So, for this truncated
week, 14600 – 14750 – 14900 are to be seen as pain points for the Nifty.
Till the time, 14900 is not surpassed with some authority, the short term
trend remains bearish and hence, it’s better not to get complacent.
Key Levels
Support 1 – 14400 Resistance 1 – 14750
Support 2 – 14250 Resistance2 – 14800
Exhibit 2: Nifty Bank Daily Chart
Here the only tricky point is the placement of the banking index. It has
already corrected in line with our expectations and has underperformed
our benchmark significantly in the recent past. This space saw massive
recovery in the latter half on Thursday after precisely testing the ’89-
EMA’ level of 32420. This level coincides with the previous breakout
point on the budget day. Hence, it would be really interesting to see how
it behaves going forward. If it fails to show any strength here, we should
then gear up for an extended correction. In the bull-case scenario, it’s
located just at the right junction from where it can take a U-turn. Let’s
see how things pan out because the other sectors too started
participating in the correction and the broader market which has been
convincingly outperforming, started to see some decent profit taking.