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 "Market Wrap Up" by  Mr. Sameet Chavan, Chief Analyst - Technical & Derivative Research, Angel One Ltd.

Over the weekend, global markets felt a tremor after US Dollar Index surpassed alarming levels which obviously has a negative correlation with equity markets. We started the week with a decent downside gap on Monday amid global weakness. As the day progressed, the selling augmented across the broader market to test the psychological level of 17000. In the following session, markets had a positive start which eventually got sold into. In fact, around mid-week, the Nifty finally sneaked below 17000 to even enter the sub-16800 territory. On Friday, the market had a litmus test ahead of the RBI Monetary policy as the Nifty was placed slightly below key support of 16800. Market participants were hoping for some aid from this event and RBI Governor did not disappoint this time as we not only witnessed a V-shaped recovery post the policy; but also went on to reclaim 17000 with some authority. 

With Friday’s smart rally, the Nifty almost engulfed the entire week’s traded-down move and hence, restricted the weekly losses tad above a percent. Markets were extremely oversold, but they were reluctant to rebound as global weakness persisted throughout the week. Post the RBI Monetary policy, we have managed to reverse precisely from a key support zone and if global markets support, we may see this relief getting extended in the coming week as well. Technically speaking, the daily time frame exhibits a ‘Bullish Engulfing’ pattern and on the weekly chart, ‘Dragonfly Doji’ is clearly visible. Importantly, Nifty managed to defend the ‘20-EMA’ (on a closing basis) on the weekly chart, which is an indication of some strength. Going forward, a move beyond 17200 on a closing basis would strengthen the recovery rally. In this case, 17350 – 17500 levels cannot be ruled out. On the flip side, 16900 – 16750 has now become a sacrosanct support zone for the bulls. We advise traders to keep a close tab on global developments and any favorable cues on this front would certainly provide the much-needed push for our domestic markets. Till the time important levels are not reclaimed, it’s better to stay positive but adopt one step at a time approach. Also, in case of an extended rebound, one can keep focusing on recent beaten-down heavyweight spaces like Financials and Auto, which are likely to give a sustainable relief.

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