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Sensex (60822) / Nifty (18115)

Clearly, the last week’s price action indicates that the Nifty constituents other than financial stocks are weak and resulted the correction in the Index. However, the banking stocks seemed to have different plans. They refused to correct in the first half of the week and in fact, when Nifty was about to knock the crucial support of 18000 in the latter half, the banking counters came for a rescue. There was complete gush seen in the banking space on Thursday, which led BANKNIFTY to close above the new millstone of 40000 with some authority. If banks had not shown this mesmerising move towards the end of the week, the Nifty would have certainly breached the 18000 mark. Now two major indices are showing complete divergence, so going forward it would be interesting to see whether the BANKNIFTY’s strength lifts Nifty higher or vice versa. Hence, all eyes on the banking space going forward; because a follow up move from hereon will certainly lift the overall sentiments in the market.

As far as levels are concerned, 18060 – 18000 are to be considered as crucial supports; whereas on the flipside, 18260 – 18400 would be seen as immediate hurdles. Since the weekly chart of midcap index is showing a bearish formation, which can be termed as ‘Engulfing’ candle; we advise traders not to create aggressive longs in high beta counters. Yes the thematic approach can still be followed, but one needs to be very selective now. Below 18000 for Nifty, the near term uptrend gets negated and then we are up for some correction which is overdue since a long time.

Nifty Daily Chart

Nifty Bank Outlook - (40324)

While the broader markets underperformed during the week gone by the Bank Nifty witnessed a sheer outperformance and rescued the benchmark to avoid breaking the key support of 18000. Bank Nifty ended with weekly gains of 2.50% tad above 40300.

Ever since the bank index has broken above its hurdle of 38300 it has picked up momentum and has outperformed as compared to the benchmark. The psychological 40000 has also been breached on the weekly closing basis and is likely to act as support in case of any dip. On the flip side, 40530 and 40750 is the next immediate resistance zone. With the current positive momentum and the ongoing result season, traders are advised to focus on stock specific trades within this basket.

Nifty Bank Daily Chart

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