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Sensex (55822) / Nifty (16614)

Our market has been an underperformer as compared to the global peers of late. On Friday, Nifty closed below 17000 to put recent swing low of 16800 in danger. The moment global markets became nervous, we had a terrible start yesterday morning to breach the important support in opening trades only. As the day progressed, the selling aggrandized across the board to send Nifty towards the 16400 mark. At one point things looked extremely bleak, but fortunately for us there was no further damage done in the latter half. In fact due to modest recovery, Nifty managed to close tad above 16600.

It was probably the weakest session in recent months and with this, we are back to August month levels. If we take a glance at the daily time frame chart, we can see Nifty precisely entering our mentioned target zone of 16500 – 16200. Since we were not so far away from the sheet anchor support of ‘200-day SMA’, we had some respite around it. But by saying this, we do not consider this as a bottom. If we have to arrive at such decision, we need to assess the situation throughout this week. The intermediate structure remains weak and now the resistance zone shifts lower from 17700 to 17200 – 17000. Till the time we do not reclaim the higher end of this range, the trend remains bearish. Before this, yesterday’s gap area of 16840 – 16966 to be seen as immediate hurdles. On the flipside, key supports are placed around 16400 – 16200.

Let’s see how things pan out going ahead. Since market is a bit oversold, we may see in between rebounds or time wise correction in key indices. So even if one wants to take a stock specific punt on the long side, it’s advisable to avoid aggressive bets and should follow strict stop losses. Barring few handful exceptions, there was complete carnage in individual stocks yesterday. Apart from this, the BANKNIFTY has finally slipped convincingly below 200-day SMA and hence, 36000 would now be seen as sturdy wall for it.

Nifty Daily Chart

Nifty Bank Outlook - (34440)

Bank Nifty as well started with a big gap-down opening and we witnessed further sell-off to test the levels around the 34000 mark. Eventually, we witnessed some respite in the last hour and with a modest recovery in the end the bank index ended with a loss of 3.31% at 34440.

Bank Index has been a major underperformer and it has already erased 3000 points from the last week high. It has now broken the key support of the previous swing low and 200SMA with a bearish gap and this gap around 35535 - 35231 is likely to act as resistance in case of any bounce back. On the flip side, 33900 - 33500 is the next immediate strong support zone. Since the intraday oscillators are highly oversold, we may see some in-between bounce back and volatility is likely to be on the higher side; hence traders need to be very selective going ahead.

Nifty Bank Daily Chart

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