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Sensex (57634) / Nifty (17177)

Despite positive global cues, our markets had a terrible session on Monday as Nifty marked the lowest close in last three months. But we could not neglect the extended recovery in global peers yesterday. All key indices started the session with a decent upside gap and as the day progressed, the upward move kept accelerating to recoup all previous day’s losses. Eventually, Nifty ended the session tad below 17200 with over one and half a percent gains.

The way market closed on Monday below 17000, things looked extremely bleak for our markets. But we had to finally give respect to the global relief and as a result, we witnessed a broad based recovery in our markets yesterday. We had mentioned how banking index is placed precisely at the ‘200-day SMA’ and it could become the deciding factor going ahead. Yesterday, the banking space had a lion share in pulling the benchmark index higher from critical levels. Now since RBI is going to announce its monetary policy today, further action in our market will be dictated by this heavyweight influential basket. Let’s see how things pan out but as far as technical levels are concerned, we expect Nifty to remain in a range of 400 – 500 points before it breaks out in either direction. On the higher side, 17300 followed by 17500 are to be seen as immediate hurdles; where Nifty is likely to feel some pressure; whereas on the flipside, 17000 has become a sacrosanct support now.

We reiterate that as long as index consolidates in this range, one needs to focus on stock specific moves which are likely to provide better trading opportunities.

Nifty Daily Chart

Nifty Bank Outlook - (36618)

Bank Nifty as well started on a positive and with strong momentum throughout the session ended with gains of 2.47% at 36618. It outperformed the benchmark ahead of the key RBI policy.

In our previous outlook, we had mentioned, prices placed around key support of 200SMA and precisely from there, we have seen prices rebounding not only to cross above Monday’s high but to push prices towards the recent higher range. This higher range consists of a confluence zone formed by 89EMA and bearish gap hence it would be crucial to see how this high beta index reacts on the policy day. If prices manage to break the higher range around 37000 – 37300 zone then we can expect this bounce to further extend towards 38000 and beyond. Whereas a failure may push prices back towards the lower range at 200SMA placed at 35700. Volatility is likely to be on the higher side and hence traders are advised to avoid aggressive bets.

Nifty Bank Daily Chart

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