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Sensex (50846) / Nifty (15081)

Post the sharp surge in Wednesday’s last hour of trade, it seemed that the mighty bulls have regained strength to take the indices higher. However, the weak sentiment in the global markets had a rub off effect on our markets and hence, we witnessed a gap down opening of more than 200 points in Nifty. The index managed to find support around the 15000 mark and showed some pullback, but the leadership from the large cap space was missing and hence, the Nifty ended the day with a cut of about a percent below 15100.

It wasn’t a trended day as far as index movement is concerned as the Nifty showed some volatility within a broad range post the gap down opening. Nifty defended its support of 15000 but the pullback move from thereon was still not strong enough to take the indices much higher. However, the stock specific momentum from the midcap basket was robust and hence, we had a positive market breadth and the Nifty midcap index outperformed to clock new record highs. In the last two weeks, we have seen moves on both sides in Nifty and there’s no clear direction seen. On the lower time frame chart of Nifty, this seems to be a ‘Broadening Triangle’ in formation which generally occurs with a lot of volatility and traders usually tend to get trapped if entered on breakouts on either side.

Nifty Daily Chart

Nifty Bank Outlook - (35802)

Market seems to be in a different mode all together as we saw a surprising gap down yesterday similar to what we witnessed last Friday. Fortunately, the damage post the opening was no closer to the Friday’s session. In fact, we had a smart recovery during the first half to almost pare down all losses. However, post the midsession, the bears once again took the charge to drag the BANKNIFTY well below 36000 to conclude the weekly expiry with a cut over one and half a percent. Yesterday’s huge gap down must have caught lot of complacent bulls on the wrong foot; because we had a smart recovery in last three sessions and especially on Wednesday there was a complete gush seen in the last hour. Clearly, it appears as if the index is not going to offer easy trade anymore now. Fortunately despite Wednesday’s strong move, we did not get carried away by the momentum and rather had a close look on few key levels. As highlighted in the previous commentary, BANKNIFTY was inched closer to the higher end (36500) of the bearish gap created last Friday. It did not have enough strength to go beyond it and eventually closed within the vicinity of key support zone of 36000 – 35600. Let’s see how things pan out in the coming session where 35500 is the level to watch out for.

Nifty Bank Daily Chart

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