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Sensex (52843) / Nifty (15863)

The situation with respect to Russia and Ukraine is getting worst day by day and due to further aberration over the weekend, market started the week with a huge downside gap well below the psychological level of 16000. The weakness extended in the initial trade which was followed by a modest recovery towards the midst of the session. However this attempt got sold into as we stepped into the latter half to make a fresh seven-month low of 15711.45. Things did not look good at that point but fortunately, we witnessed yet another round of recovery in the last hour of the session which pulled the Nifty towards 15900 to trim some portion of losses. With reference to our recent commentary, the Nifty started fresh round of selling after consolidating for three days around 16500. Apart from this, the overall negative structure of banking index as well as Nifty Midcap 50 index, was clearly hinting towards a possible correction below the 16000 mark. In hindsight, we may see participants blaming the geopolitical concerns for this correction, but it was reflecting in the price behavior since last few days. Anyways, Nifty has now entered a crucial support zone around 15900 and since market is a bit oversold, we may see some rebounds in between. But are we completely out of the woods? We do not want to jump on to this conclusion immediately. Since as of now we are not expecting Nifty to go below 15500 – 15200 in the worst case scenario, we would advise traders avoiding aggressive shorts from hereon. In fact, now it’s the opportunity for investors to start nibbling in with a broader view and for traders, one should remain stock specific

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook - (32871)

The week started with a huge gap down opening breaking below the December 2021 swing low around 34000. As the day progressed the sell-off extended to mark intraday low of 32376.60. Eventually, with a modest recovery in the fag end, the bank index eventually ended with a massive cut of 4.47% at 32871. Since June 2021, the vicinity around 34000 has been acting as strong support however with the current momentum of bears the said levels have been easily breached. Now as per the principle of Technical analysis, previous support will now act as resistance and hence 34000 should be now seen as a stiff resistance. On the contrary, the lead indicator RSI has slipped below the oversold zone and that may result in some inbetween bounce. Hence it advised not to have aggressive sell positions hereon. On the lower side, immediate support is now seen in the 32000 – 32300 zone. Traders should take one step at a time approach and can focus on a stock-specific approach All this while, we were firm on our bearish stance but from hereon we would like to adopt ‘One step at a time’ strategy and would focus on momentum based trades during the day. As far as levels are concerned, 16000 followed by 16200 are to be seen as immediate hurdles; whereas on the lower side, 15700 is to be seen as immediate support. In case of any further escalation globally, we would see Nifty entering our mentioned sacrosanct support zone of 15500 – 15200.

Exhibit 2: Nifty Bank Daily Chart

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