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Sensex (37582) / Nifty (11110)
During the week gone by our markets opened lower with a decent margin on Monday. However, index managed to recover fair bit of ground on the same day to reclaim the 10800 mark. On the subsequent day, index followed similar kind of pattern and showed first sign of revival. Despite Wednesday’s weak session, index took off at the stroke of the penultimate hour on Thursday and we saw complete gush in the market to see some sharp short covering moves. This lead was extended on Friday to eventually conclude the week with a smart recovery of more than 300 points from the lowest point.
Fortunately, we managed to defend the 11000 mark on a weekly closing basis and the recovery started after precisely retesting some key moving averages and Fibonacci ratios. Firstly, index tested the 61.8% retracement level of the previous up move. This point was coincided with the ’89-EMA’ on weekly chart as well as 161% (Golden Ratio) of the recent small up move from 11108.30 to 12103.05. In addition, the ‘RSI-Smoothened’ oscillator on daily chart had reached the lowest level since October 15, 2018. All these key observations were hinting towards the possibility of some relief from the crucial junction of 10800. Hence, we avoided shorting and in fact kept focusing on some probable short covering candidates. The strategy played out well and we are back above 11100.
But the real question lies whether the worst is over or not? In our sense, it would be too early to comment on this and although, we have taken a pause at crucial technical cluster of supports, we need to wait for some further confirmation.
As of now, one should construe this rally as a relief move and going ahead, 11200 – 11300 are the levels to watch out for. If we manage to surpass this wall, the next possible resistance is placed in the zone of 11450 – 11500. At this juncture, the pragmatic approach would be to take one step at a time and focus more on individual stocks. On the lower side, the immediate support is seen around 11062 – 10975 and with a broader view, as long as we are defending 10782 – 10750, there is no reason to worry for.
Nifty Bank Outlook - (28432)
During last week, the Nifty Bank index formed a support base around 27500-27400 and rallied higher in last couple of sessions. The index gains about 1000 points from its Thursday's lows and ended the week tad below 28500.
The index has retraced higher in last couple of trading sessions and provided the much required relief post the recent sharp correction. On the daily chart, this up move seem to be a pullback move as of now as it requires a 'Higher Top Higher Bottom' formation to confirm the change in trend. The immediate supports for the index are placed around 28200 and 27950 whereas resistances are seen around 28800-28950. Traders are advised to trade with a stock specific approach with a proper exit strategy as well.
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