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Sensex (60177) / Nifty (17957)

Monday’s spectacular move was followed by a quiet start yesterday morning marginally in the green. However, in the initial trade, small gains just disappeared and then index slipped into a consolidation mode thereafter. The profit booking extended a bit in the first half and in the process, the Nifty went on to test the 17950 mark. Fortunately, as we stepped into the latter half, the buying resumed to recoup all losses. However, towards the fag end, market became nervous all of a sudden, which resulted into a sharp downtick to slide below morning’s low as well. Eventually, Nifty ended the session convincingly below 18000 by shedding over half a percent.

The way market closed in the previous session around day’s high, we should have ideally opened higher and in fact was expected to extend the rally. Unfortunately this didn’t happen; because the major drivers of Monday’s move (banking) saw some decent profit booking. Hence, we could not even surpass Monday’s high of 18114.65. With yesterday’s tail end sharp profit booking, one shouldn’t get carried away as such small profit taking is a part and parcel of the market activity. Going ahead, Monday’s gap area of 17800 – 17700 is likely to provide some cushion for the index and till the time we do not see it closing convincingly below it, there is no reason to worry for

In fact, if we see any decline towards intraday support of 17900 – 17800, one can think of going long. On the flipside, 18100 has become an immediate hurdle above which we are good to go towards 18350. Despite some nervousness in key indices, the broader market did extremely well. Hence, traders should keep focusing on such potential movers, especially stocks from the cash segment which are providing some excellent trading opportunities.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook - (38068)

Bank Nifty started on a mild positive note however it lacked follow-up buying to surpass Monday's high and eventually started slipping lower to test vicinity of 38000. Subsequently, the bank index traded in a range and made an attempt of intraday recovery however with fag end profit-booking the bank index slipped below morning lows and at closing eventually ended with a cut of 1.47 tad above 38000.

In our previous commentary, we did incline towards the continuation of Monday's rally however as the bank index had already rallied 2500 points from Monday's low the hourly indicators were in a high overbought zone and hence further traction was unavailable. Yesterday's move should be taken as profit booking which is actually healthy in nature and as the prices continue to hold the trend line breakout levels one should refrain from taking contra bets rather use such dips as buying opportunity. In such scenario, immediate support is seen around 37700 - 37500 whereas on the flip side, resistance is at 38500 and 38800.

Exhibit 2: Nifty Bank Daily Chart

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