IGI Logo

Below is Quote on The Weekly Market Wrap Up - Banking continues to impress; but some distortion in midcap index by Mr. Sameet Chavan Chief Analyst-Technical and Derivatives, Angel One Ltd 

The week started with a decent bump up which was then followed by yet another gap up on Tuesday to reach new millstone of 18600. However, the high beta midcap counters (recent movers) started correcting fiercely, which dampened the overall sentiments in the market. Nifty had a rub off effect of this and in the process; it came off slightly in the following couple of sessions as well. Thursday morning, the global markets were a bit stable and as a result, our markets opened with a decent upside gap, exceeded the SGX Nifty by a fair margin. However it was merely a formality as we not only saw Nifty erasing all gains but also went on to slide below 18100 during the penultimate hour. Fortunately due to late recovery in some of the heavyweights, Nifty managed to recover fair bit of ground to conclude the weekly expiry tad below the 18200 mark. The similar price action was seen on Friday too and with a gradual decline, Nifty ended around 18100.

Clearly, the Nifty constituents other than financial stocks are weak and they are leading the correction in the index. However, the banking stocks seem to have different plans. They refused to correct in the first half of the week and in fact, when Nifty was about to knock the crucial support of 18000 in the latter half, the banking counters came for a rescue. There was complete gush seen in the banking space on Thursday, which led BANKNIFTY to close above the new millstone of 40000 with some authority. If banks had not shown this mesmerising move towards the end of the week, the Nifty would have certainly breached the 18000 mark. Now two major indices are showing complete divergence, so going forward it would be interesting to see whether the BANKNIFTY’s strength lifts Nifty higher or vice versa. Hence, all eyes on the banking space going forward; because a follow up move from hereon will certainly lift the overall sentiments in the market.

As far as levels are concerned, 18060 – 18000 are to be considered as crucial supports; whereas on the flipside, 18260 – 18400 would be seen as immediate hurdles. Since the weekly chart of midcap index is showing a bearish formation, which can be termed as ‘Engulfing’ candle;  we advise traders not to create aggressive longs in high beta counters. Yes the thematic approach can still be followed, but one needs to be very selective now. Below 18000 for Nifty, the near term uptrend gets negated and then we are up for some correction which is overdue since a long time.

Above views are of the author and not of the website kindly read disclaimer