Sensex (48564) / Nifty (14281)
Nifty started the session around the previous week’s close but right from the word go, Nifty witnessed some selling pressure and by noon it breached the 14300 mark. The index then recovered from the low but that intraday pullback got sold into, and it marked a low of 14222 during closing. The Nifty index registered a loss of over a percent at close while the Bank Nifty corrected by over 400 points after showing some resilience in the first hour of trade.
Nifty had already indicated signs of some correction in Friday’s session as it closed below its 5 day EMA. The index breached its support of 14380 in the first hour of the trade which confirmed an extension of this profit booking and then we witnessed a good selloff in the broader markets.
The Bank Nifty showed some relative strength in the first hour of the trade, but it then synced with the market move and corrected for the rest of the session. The Nifty Midcap index resisted around some important retracement level last week, and thus this space too witnessed a decent profit booking in yesterday’s session.
If we look at the broader picture, this correction definitely seems to be a corrective phase within an uptrend which would provide good opportunities to buy stocks on dips. However, from an intraday or a short term perspective, the volatility is likely to be high as some more profit booking could not be ruled out. Hence, traders should use intraday pullbacks to exit longs.
The U.S. Dollar index has seen a sharp correction in the last few months and the index chart seems to be inversely correlated to the same. In last couple of sessions, we have seen a pullback move there and thus, this too seems to be leading to profit booking in equity markets. The immediate supports for the Nifty are placed around 14180 followed by 14130 while 14400 would be the immediate resistance.
Nifty Daily Chart
Nifty Bank Outlook - (31812)
After Friday’s hint of profit booking, markets started the new week marginally in the green. However, within few minutes of trade, Nifty entered a negative territory. In the first half, BANKNIFTY was showing some outperformance as it was reluctant to fall, mainly due to some sturdy trade in banking giant HDFC BANK after posting it’s quarterly numbers over the weekend.
This resilience from banking index didn’t last too long, because some of the heavyweight banks started to take a toll. Eventually, BANKNIFTY ended with a decent correction of nearly one and half a percent. Yesterday in the first half, banking index outperformed Nifty but in the latter half, the sell off was mainly led by banks after a decent rebound around the midsession.
With this it is comfortably below 32000, indicating some weakness. For the coming session, we expect the weakness to persist and hence bounce back towards 32000-32200 is likely to get sold into. On the other hand, the correction is likely to extend towards next key support zone of 31500-31300.
Nifty Bank Daily Chart
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