Sensex (37385) / Nifty (11076)
During the last week, The Nifty started trading on a positive note and rallied higher during the week to surpass the 11000 mark. Although, the index witnessed some retracement in Thursday’s session from its highs, the minor dip was bought into on the last day of the week and Nifty ended well above the 11000 mark. Despite a truncated week, Nifty managed to clock decent gains over a percent on weekly basis, keeping hopes alive for further relief.
During last week, we had highlighted about the formation of reversal pattern on the weekly chart of Nifty, Bank Nifty and the Nifty Midcap50 index. This, along with the ‘Fibonacci Time Retracement’ had indicated about probability of an up move in the broader markets. During the last week, index along with the broader market witnessed decent up move which was very much on our expected lines. Now, if we observe the Nifty daily chart, it is seen that the recent price action has also led to a formation of an ‘Inverse Head & Shoulders’ pattern which is a trend reversal pattern. A move above the 11100 mark will lead to a breakout, which could then provide impetus to the on-going rally. Looking at the overall development in last couple of weeks, we will not be surprised to see it happening soon (probably today itself). This will lead to some short covering moves first and then will also attract traders who have been waiting on the side-lines for this confirmation. In this scenario, the northward trajectory will continue towards 11250-11300 first and then may even extend up to 11400-11450. Hence, we continue with our recent optimistic stance and advice traders not to venture into taking any contra bets. The immediate supports for the index are placed around 10945 and 10890.
Amongst the sectoral indices, the Nifty Realty and the Nifty PSU Bank index witnessed outperformance during the week. The Metals and the Auto space too continued their winning streak for the second straight week. But the real show stealers were the bundle of stocks from the cash segment that soared as if there is no tomorrow. We expect these sectors along with the banking index to continue doing well in near term and hence, traders are advised to look for buying opportunities in stocks within these sectors.
Nifty Bank Outlook - (28099)
Post forming a bullish 'Dragonfly Doji' pattern in the previous week, the Nifty Bank index rallied higher during the week gone by and it ended well above the 28000 mark, registering weekly gains of more than 3 percent. The stocks within the banking space witnessed an upmove with good volumes which is a positive sign. Also, the index has given a close above its '20 DEMA' after two months along with a breakout from a trendline resistance on the short term charts. Hence, we expect this sector to continue its upmove in the near term. Thus, traders are advised to continue to trade with a positive bias. The near term supports for the index are placed around 27800 and 27570 whereas resistances are seen around 28280 and 28470.
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