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Sensex (52541) / Nifty (15692)

On Friday, once again we had a nervous start but in the midst of a tug of war between both counter parties, the Nifty eventually ended with a cut of 0.44% slightly below 15300, marking sizable cut of 5.61% on a weekly basis.

It was the worst week for our markets in the current calendar year and in fact, Nifty has closed at the lowest level in last 12 months. There has been no respite in macro factors globally and hence, market continue to feel the heat as they are now placed at multi-month lows. When this terrifying phase will end, nobody knows about it and till the time we do not see some convincing relief on the global front, it’s better to stay light on positions. Taking a glance at the weekly time frame chart, we can see prices sliding below ’89-EMA’ for the first time after July 2020. So, price-wise it needs to be construed as a breakdown, does not augur well for the bulls. On the flipside, Nifty is exactly placed at the previous breakout point of May 2021 which is around 15400 – 15300. In addition, the ‘RSI-Smoothened’ oscillator on the daily chart is showing a ‘Positive Divergence’ i.e. lower lows in recent prices and higher lows in the oscillator. This condition generally happens at the fag end of any down trend. Hence, looking at the charts, we are clearly in two minds at this juncture. In our sense, although we did not manage to catch the recent down move, it’s better not to get carried away in the challenging times.

As far as supports are concerned, 15200 – 15000 are to be seen as immediate supports and breach of the same, would certainly create some panic kind of situation in our markets. On the flipside, the markets would regain the strength only after surpassing the key levels of 15700 – 15800 on a closing basis. Till then its not advisable to carry aggressive longs overnight. Traders are advised to take one step at a time in this week and should ideally look to lighten up positions during the day only. Since we are mirroring the global trends, markets can surprise us anytime in either directions. There is a famous saying in the market that one should avoid catching a falling knife (market). This holds true for momentum traders but with a slightly broader perspective, we are of the strong belief that now one should certainly start accumulating quality propositions in a staggered manner.

Nifty Daily Chart

Nifty Bank Outlook - (33339)

The Nifty Bank index plummeted over 5 percent in the last week, tracking the weak global cues. The initial gap down at the very start of the week signaled the inherent weakness that gradually aggravated throughout, and the index slipped below the critical support of the 33000 mark. On technical parameters, the index is in a secular downtrend as it is placed below the lower Bollinger band on the daily time frame. Even the 14-period RSI has almost entered the oversold region, inferring the ongoing weakness. At present, the previous swing low of 32000-32200 is expected to act as the immediate demand zone for the index, while any breach below could be very disruptive in the short term. In contrast, the unfilled gap of 33800-34300 holds the sturdy resistance in the near term. Meanwhile, we firmly advocate to avoid any aggressive bets in the index and look for opportunities with a stock-centric approach.

Nifty Bank Daily Chart

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