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Sensex (57107) / Nifty (17026)

On Friday, the new variant of coronavirus haunted market participants across the globe and as a result, we had a massive gap down followed by aggrandised selling throughout the session to close tad above the 17000 mark.

Last week’s sharp correction has clearly validated our recent cautious stance on the market. Considering the ‘Shooting Star’ on the monthly chart, we anticipated a formation of bearish ‘Head and Shoulder’ pattern on daily chart. The said pattern finally got confirmed on Monday after breaking the neckline level of 17700. The moment our anticipation turned into reality, there was no ambiguity left. Although our initial target of 17200-17000 has been met, market is not done with its correction yet. Considering the weekly chart, we will not be surprised to see it extending towards 16500 - 16200 in coming days. We do not want to sound too pessimistic, but this is what the price structure looks like at this moment. On the flip side, 17200 - 17400 are to be seen as immediate hurdles.v

With a slightly broader view, if Nifty has to regain any strength, it needs to surpass 17700 with some authority. Honestly this looks highly unlikely at current juncture as we expect lower levels to get tested first. The broader market too seem to have succumbed to this selling pressure and hence, one should not be in a hurry to do any kind of bottom fishing immediately.

Nifty Daily Chart

Nifty Bank Outlook - (36025)

On Friday, Bank Nifty aswell started with a gap down opening and without any major intraday bounce kept on sulking lower to eventually end with a cut of 3.58% tad above 36000 mark.

Bank Nifty was the major culprit during the last week for dragging the markets lower. It has already corrected around 6000 points from the all time high and has approached the 200SMA placed around the 35700 levels. Generally, this key average has a high influence in the world of technical analysis however as the momentum is strongly gripped by bears one should avoid trying to catch the falling knife. Even if we do see a bounce back due to oversold conditions, such bounce should be used to exit long positions as we expect further lower side in the near term. As far as levels are concerned below 35700 next support is at 35350 whereas resistance is at 36500 – 36655.

Nifty Bank Daily Chart

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