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Sensex (54892) / Nifty (16356)

Global markets looked a bit cheerful yesterday morning and as a result, we kicked off the session with a decent upside gap tad below the 16500 mark. In the initial trades, we started trimming gains and as we approached the RBI policy announcement, Nifty went on to slide slightly below 16300. However post the announcement, markets just took off and within no time, we were back inside the positive territory. At one point, we even surpassed 16500 by a small margin. Markets were all set for an extended move but once again post the midsession, traders became nervous and as a result, we were back to morning lows. Eventually, the volatile session ended around 16350 by shedding nearly four tenths of a percent to previous close.

Yesterday, RBI governor announced yet another repo rate hike by 50 bps and since this outcome was already discounted in markets, we witnessed a strong up move immediately after the announcement. It appeared as if markets are going to end their recent slumber phase; but unfortunately, this up move got fizzled out in the latter half. Technically, more than opening or intraday price movement, the closing action is very important and the way we closed around the lower range yesterday, it does not augur well for the bulls. However, since 16300 is still defended on a closing basis, we continue to remain hopeful.

For the coming session, 16300 – 16260 should be seen as key supports and only a breach of the same, would resume recent downtrend. On the flipside, 16500 remains a sturdy wall and till the time, we do not surpass it convincingly, bulls would not have any conviction in their moves.

Nifty Daily Chart

Nifty Bank Outlook - (34946)

On the monetary policy day, Bank Index started on a positive day however it quickly slipped lower and went on to test Tuesday's low. As the event was already discounted in the prices there was a sudden gush of upmove post the decision announcement and the Bank Nifty marked an intraday high of 35449. This positive momentum did not continue and prices slipped back to the Morning lows to eventually end with a loss of 0.14% at 34946.

Yesterday, we mentioned the support at the 38.2% retracement level, and in spite of the volatility, the bank index managed to hold on to it forming a matching lows pattern. Hence, 34750 – 34800 remains a strong support and is the ideal range to bounce back however if it fails to hold then one can expect further weakness in the near term where 34500 - 34200 can be retested. On the other hand, yesterday's high around 35450 is the immediate resistance and for the bulls to make a come back would need to have a sustained close above it. Traders are advised to focus on these levels and trade accordingly.

Nifty Bank Daily Chart

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