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Below is the Daily Market Wrap Up By Mr. Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd

Nifty snaps eight-day winning streak of around 18000

After an extended weekend, our market started the proceedings on Tuesday with some hesitance. Due to overall strength, the buying emerged at lower levels to reclaim the 17700 mark. In the subsequent sessions, the buying accelerated across the board to hasten towards the psychological mark of 18000. On Friday, the market started on a muted note and after the initial hours, we witnessed a nosedive in key indices. Before anyone could realize it, we were off Morning’s high by a fair margin. Eventually, with some consolidation in the latter half, the Nifty ended Friday’s session around 17750 with more than a percent cut and thereby trimmed a major chunk of weekly gains.

In our previous intra-week commentary, we had clearly stated how it’s important not to get carried away by Thursday’s close at a 4-month high. Friday’s decent correction has certainly validated our stance of staying light at higher levels and now, the way our key indices snapped their 8-day winning streak, it does not augur well for monthly expiry week. From a technical point of view, Friday’s large bearish candle has engulfed the previous three sessions’ price movement, which is a sign of weakness. In addition, we have closed convincingly below the ‘5-day EMA’ for the first time after July 26. Hence, in the first half of the coming week, any bounce towards 17800 – 17875 is likely to get sold into. Traders are advised to lighten up longs in this rebound and stay on the sidelines for a while. Aggressive traders can certainly look to initiate bearish bets by keeping a strict exit strategy beyond 18000. On the flip side, if we see some nervousness globally, we may see Nifty testing lower levels of 17600 – 17450.

This is to clarify that the overall trend remains strongly bullish and since we have rallied vertically from 16400, we may see further profit booking in the coming week. This view remains valid as long as 18000 is not breached on a sustainable basis. Also, in case of this probable decline, it is to be considered a healthy development for the next leg of the rally and hence should be used to go long. Trades are advised to keep a close tab on the above-mentioned scenarios and should continue with a stock-specific approach.

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