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Below is the Daily Market Wrap Up By Mr. Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd

We had an excellent start to the week on Monday owing to favourable global cues. However, markets failed to sustain at higher as the early morning gains just disappeared in the first half. During the remaining part of the day, Nifty kept flirting around the equilibrium point. Eventually in the absence of any momentum, Nifty ended the session tad above the 18100 mark. As the week progressed, markets started becoming a bit nervous and hence, we could see it grinding lower gradually by breaking minor supports on the way through. The selling aggravated on Thursday and in the process we first breached 17800 and then went on to even slide below the crucial support of 17700. Due to the modest recovery in the latter half, the bulls managed to defend this level on a closing basis.

During the week, Nifty did correct by nearly a couple of percent; which certainly cannot be considered as a major damage. Also it did close above the key support on a weekly basis but the way overall things are positioned, we will not be surprised to see it surrendering (17700) in the first half of the forthcoming week itself. Since last few days, we have been mentioning the ‘Head and Shoulder’ pattern on the daily chart of Nifty which was in process. After today’s close, the final (right) shoulder of this pattern is completed and prices are placed exactly at the ‘Neckline’ point of the same. A sustainable move below 17700 (which seems likely) would activate the pattern and as a result of this, we could see a fresh leg of correction in coming days. After this, next levels to watch out for would be 17450 and 17200, where one needs to reassess the situation. On the flipside, if Nifty manages to hold 17700 and move higher first, then 18000 – 18200 are to be considered as strong hurdles, which as of now we do not expect to get surpassed in the near future.

The major culprit in this week’s correction was the continuous weakness in banking and metal counters. Although banking index is nearing its strong support zone, we do not expect any major bounce back in this space. Apart from this, the broader market looked a bit tentative today and the way it’s closed today; things do not augur well for the bulls. To summarize, we advise traders to remain light which we have been advocating of late and even if one wants to accumulate stocks with a broader perspective, one needs to be a bit patient as we expect some reasonable prices to come in next few days.

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