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Sensex (60322) / Nifty (17999)

Market had a quiet start yesterday marginally in the green owing to mixed global cues. During the first couple of hours Nifty came off a bit to test 18050 and then went through a brief period of consolidation. Around the midsession, the buying emerged in some of the heavyweights which pulled the index back above the 18100 mark. However as we stepped into the final session of the day, index started becoming a bit nervous. In fact due to aggravated selling towards the end, Nifty went on to slide below 18000 with a cut over half a percent to the previous close.

Since last 10 odd sessions, Nifty has done nothing. In fact if we take a close look at the daily time frame chart, we can see prices oscillating precisely within the boundaries of a small ‘Upward Sloping channel’. Due to last two days’ of small correction, we are trading at the midpoint of this trading range; but some of the heavyweights are now indicating a possible weakness from hereon. For the coming session, 17900 – 17800 are the levels to watch out for. This being the lower boundary of the ‘Channel’ pattern, a sustainable breach of this lower range would lead to further correction in coming days.

On the flipside, 18130 followed by 18200 are to be considered as stiff hurdles. We continue to remain cautious on the market and advise using intraday rebounds to lighten up longs. Yesterday’s correction was mainly led by RELIANCE and banking space; hence all eyes on these going ahead as they are going to dictate the near term direction.

Nifty Daily Chart

Nifty Bank Outlook - (38307)

We had a flat start yesterday and then index attracted fresh selling right from the word go. During initial two hours, the banking index corrected below 38300 and then made an attempt to recover but once again this got sold into to almost touch 38200 in the final hour. Finally, we conclude yet another session in red with a cut of a percent to previous close.

As mentioned in our last couple of articles, we were uncomfortable in initiating any bullish bets specifically in this space considering its underperformance. Yesterday, the index even tested the previous swing lows of 38346 and further selling may easily drag the BankNifty below 37500. Thus, we maintain our cautious stance on market and we advise exiting any longs in pull back. As far as levels are concerned, 38700-38800 shall be looked as strong resistance zone; whereas, 37700 and 37400 are the demand zone now.

Nifty Bank Daily Chart

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