Sensex (36487) / Nifty (10764)
Following the positive cues from the Asian bourses, our markets started trading for the week with a gap up above the 10700 mark. The index continued the momentum and tested 10800 as well during the day, before settling with gains of about one and a half percent at 10764.
The indices continued its northward journey and rallied to test the 10800 mark yesterday. Although the index traded within a range post the gap up opening, the biasness was clearly positive as stocks from the broader markets witnessed good momentum throughout the day. Many stocks from the cash segment witnessed sharp upmoves supported by higher volumes, thus providing good opportunities for traders. If we look at the index, Nifty has now approached the resistance zone of 10800-11000 which coincides with the ‘200 SMA’ on the daily chart. However, so far, there are no signs of reversal and hence, one should avoid taking any contra bet. With yesterday’s gap, 10700-10630 will now be seen as the immediate support for the index.
The Nifty Midcap50 index has surpassed its swing high and its ‘200 SMA’, indicating that stocks from the midcap space could continue to provide good opportunities for momentum traders. Hence, traders are advised to look for stock specific opportunities at the moment. Also, it is advisable not to carry heavy positions overnight till we surpass the immediate hurdle of 11000.
Nifty Daily Chart
Nifty Bank Outlook - (22199)
Our markets have been unstoppable since last few days, however the banking index seems to have taken a pause and again, it started underperforming the benchmark index. Yesterday also after a good head start, although the broader market was buzzing, the banking index cooled off from higher levels and eventually erased some portion of gains.
As per our weekly commentary, we have advocated lightening up positions (in index) in the ongoing rally, at least for momentum traders. But by no means, we advice going short, because the overall momentum in the broader market is extremely strong. In fact, the Bank Nifty is standing at an interesting point. A breakout beyond 22500 would trigger a strong upward bias to push the entire markets higher from the current levels as well. However, in case if Bank Nifty slides and stays below 21700, this will apply brakes on the ongoing momentum and then the banking space would be the first one to experience strong profit booking. Hence, next couple days would be quite crucial for our markets.
Nifty Bank Daily Chart
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