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Sensex (59135) / Nifty (17413)

On Friday, SGX Nifty was indicating a gap down opening and in line with this, our markets had a big gap down opening. As the day progressed further weakness was seen to retest sub-17350 levels. Eventually after some respite Nifty ended a tad above 17400 with a weekly loss of a percent.

Now, with two back-to-back weak sessions, the momentum is again in favor of the bears. Despite this, we remain a bit hopeful and expect important levels to remain unbroken in this week; especially after seeing prices showing resilience around the 200-SMA and forming a key technical pattern known as ‘Bullish Hammer’. It would however be very early to jump to any conclusion and considering the recent volatility, traders should ideally wait for the trend to establish. In such a scenario, Friday’s low around 17320 would be seen as immediate support followed by sacrosanct support at February's swing low of 17250. On the flip side, the bearish gap left around 17570 – 17600 should be considered an immediate hurdle. In our sense, instead of swaying on both sides of the trend, traders should ideally prefer staying light on positions and keep accumulating quality propositions in a staggered manner.

Nifty Bank Outlook (40485)

We had a gap down opening tad below 40800 on Friday and followup selling dragged the index towards 40350. Finally, we settled the week with a cut of almost two percent tad below 40500.

The sell-off seen on Friday has certainly dampened the overall sentiments, especially in the banking index which was clearly showing resilience in previous couple of sessions. However, we are currently hovering around the 61.8% retracement of the recent rally and going ahead, it would be important to see how things pan out in this week. We expect 40000 – 39700 to provide cushion to any weakness and banking stocks to provide the helping hand at lower levels. On the flipside, 40800 followed by 41200 are to be seen as immediate resistances. A move beyond this would certainly bring back the strength in this space which can uplift the overall market sentiments. Next few trading sessions are to be the crucial one as it would set the near-term path for our markets.

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