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Sensex (66267) / Nifty (19660)

Following the FOMC meeting, the Asian bourses opened higher, prompting a gap-up opening in the Indian market as well. Initially, trading remained upbeat, but as the day progressed, profit booking in most of the heavyweight spaces drag the market to test support of 19600. Eventually, with modest recovery towards the end, the monthly expiry panned out with a cut of 0.60%, tad above 19650.

The day saw some bearish activity, causing discomfort in the bulls' camp. The weakness was attributed to overbought conditions and the monthly settlement, as global cues remained buoyant. Going ahead, the profit booking may extend a bit and the support level of 19500 (20EMA) is likely to get challenged in this scenario. This average has proven to be a strong base during previous price corrections in May and June, resulting in significant positive momentum. Therefore, it holds pivotal importance for the upcoming sessions, as a break below it may lead to meaningful profit booking in days to come. On the other hand, yesterday’s supply zone around 19850 – 19880 is expected to act as a stiff resistance, and only a breakthrough would trigger an upside momentum. The bulls have enjoyed a winning streak for four consecutive expiries, with July recording gains of more than 3.5%. This optimism is expected to persist, but the next leg of the upward move might not be as smooth as it has been.

Nifty Bank Outlook (45679)

The trading session for the monthly expiry started on an optimistic note. After reaching a high of 46300 in the early morning trade, the index began to slide downwards, and any genuine attempt of recovery was getting sold into, resulting in a correction of more than 700 points from the day's peak. Eventually after some respite in the last thirty minutes, the BANKNIFTY concluded the day by shedding over eight tenths of a percent from previous close, settling just above the 45600 mark. Yesterday’s sharp profit booking might be a bit unexpected for most of the market participants, but we were certainly not surprised with it. We were clearly seeing 46200 – 46300 as a congestion zone and precisely from that cluster, the banking index skidded as the day progressed. With yesterday’s development, we can see BANKNIFTY engulfing last five days’ price action, which certainly does not augur well for the bulls. For the coming session, crucial support zone of 45600 – 45500 is in jeopardy now. Below this, 45200 – 45000 can be retested soon. On the flipside, 45900 – 46100 – 46300 are to be treated as immediate hurdles for the banking index.

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