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Sensex (36546) / Nifty (10944)
The recovery mood started in our markets from the prior day of the Union Budget. After giving a good move of nearly 500 points in five days, the rally halted on the day of RBI Monetary policy. It was quite surprising to see massive sell off on the following day, despite RBI Governor granting 25bps cut in Repo rate and changing the stance to neutral. The selling aggravated in the last hour of the week to shave off decent portion of intra-week gains.
First half of the week gone by has been fantastic for benchmarks. In the process, Nifty managed to surpass its multi-month hurdle of 11000. In this move, the broader market continued to underperform; but on Thursday, index consolidated and there was some early sign of revival seen in so many individual pockets. This ecstasy did not last long as we saw yet another bout of immense selling across the board on Friday to conclude the week with lot of ambiguity. Going ahead, if market has to see a robust move, it would be very important for other pockets to participate as well. As far as levels are concerned, we are still in the relatively safe zone. Going ahead, 10900 – 10850 would be seen as a key support zone. Till the time Nifty remains above it, there is no reason to worry for. On the flipside, 11041 followed by 11118 are the levels to watch out for.
At this juncture, a prudent strategy would be to stay light and follow a stock specific approach. One could switch on to the aggressive mode only after Nifty surpassing the 11000 mark along with the broader market participation. In this scenario, a move towards 11300 – 11400 cannot be ruled out. Only a sustainable move below 10850 would give a dent to above mentioned optimistic scenarios.
Nifty Bank Outlook - (27294)
During last week, the Nifty Bank index rallied higher in initial couple of trading sessions. However, on the day of RBI monetary policy, the index approached its resistance zone of 27550-27600 and was unable to surpass the same. The index corrected from that range and ended the week tad below 27300 mark.
From a near term perspective, only a breakout above 27600 will lead to a trended up move in the Nifty Bank index. The short-term support for the index is placed around 27200, below which we can see the index extending the corrective phase. As mentioned in our last week's report, we continue with or advise for traders to focus on stock specific moves from the banking space until we see a breakout above the mentioned resistance.
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