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Sensex (52475) / Nifty (15799)

During the last week, our markets started on a pleasant note on Monday as there was some positivity seen across the globe. With this, our benchmark registered a fresh record high while the banking remained quiet on the first day. During the remaining part of the week, Nifty consolidated in a small range as the banking kept sulking. Fortunately, the IT space saw some renewed buying interest which kept our benchmark in the positive terrain to eventually register yet another record high beyond the 15800 mark. Among the key indices, Nifty gained 0.82% during the week which was mainly led by handsome gains of 4.52% in Nifty IT. The Nifty Midcap 50 index too added another 2.57% to its kitty; however the banking remained laggard by losing over half a percent.

Since we are trading in an uncharted territory, a small uptick from hereon would give us new high. Hence, it should be considered only as a number now. Since last couple of weeks, we have been mentioning how there is no major hurdle seen before 16000 and in line with this, the Nifty has been continuing its rally. But the kind of price action we witnessed during the week (especially in banking space), it’s not giving us the comfort now. Hence, if benchmark has to reach this milestone of 16000 and even move beyond it, the BANKNIFTY needs to surpass the sturdy wall of 36000. If it fails to do so then we may see some bouts of profit booking in this week. The key support is to be seen at 15700 – 15550 for Nifty; whereas 15850 – 15900 are to be considered as immediate resistances.

There is another notable observation that is making us a bit cautious at current levels. The Nifty Midcap 50 index which is enjoying its dream run since many months has now reached a crucial juncture. On the daily chart, we can see it reaching the ‘100% Price Extension’ of the previous up move and importantly on the weekly time frame, we can see it coinciding around the ‘161% Price Extension’ of the first up leg started after March 2020 lows. By highlighting this, we do not expect the multi-year Bull Run to end; but at least a short term pause or profit booking cannot be ruled out. Hence traders are now advised to take some money off the table and avoid aggressive bets overnight. Also, the stock specific approach still can be continued but one has to be very fussy and should follow proper risk management from hereon.

Nifty Daily Chart

Nifty Bank Outlook - (35047)

Bank Nifty had a disappointing week as even though a strong outperformance was seen in the broader markets this space ended the week with a cut of 0.69%.

On Thursday, the bank index after bouncing from the key support of 20SMA some hopes was created by the bulls for the catch-up move however on Friday it continued with its lethargic move. As mentioned above the underperformance of the banking space is a sign of concern and if it has to perform then it's now or else we may see some weakness in the broader markets as well. Going ahead, immediate support is placed around 34600 and 34200 whereas immediate resistance is placed around 35400 and 35600. For the bulls to make a strong come back it will need to surpass the stiff wall of 36000 levels and till then any upmove is likely to be a half-hearted bounce back.

Nifty Bank Daily Chart

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