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Sensex (60224) / Nifty (17711)

We kickstarted the week on a strong note taking favorable global cues into a consideration. In the initial hour, the move extended to reach the 17800 mark. However, the traders chose to take some money off the table at higher levels, which resulted in a gradual decline throughout the remaining part of the session. Eventually, the Nifty managed to hold nearly seven tenths of percent gains to conclude tad above 17700.

Our markets started the session from where it left on Friday and this time, we had support from our global peers. But it seems we had already anticipated it in advance as we witnessed a stellar move during previous session. On Monday, due to some overbought condition mainly in the financial space, we didn’t have enough legs to maintain the similar tempo. Technically speaking, we are not surprised with this profit booking, because Monday’s high precisely coincides with the 61.8% retracement of the recent down move. However, by no means, we expect resumption of recent corrective phase. This is merely a profit booking after a sharp recovery in last two days and after reaching important levels. As a trader, such declines would provide excellent opportunities to create fresh longs as we expect Nifty to surpass 17800 sooner or later and head towards the psychological mark of 18000. As far as supports are concerned, 17600 – 17500 are to be seen as immediate levels

Traders are advised to continue with an optimistic approach and now should start focusing more on thematic movers. Apart from this, the broader end of the spectrum has been sulking for a long time now, has started showing early signs of revival. It’s better to keep a close eye on this segment as well.

Nifty Bank Outlook (41350)

Following the strong closing on Friday, the week started on a positive note and the momentum continued during the morning session. As the day progressed, there was a lack of buying at higher levels and profit booking in key heavyweights pulled the bank index lower to erase a major part of morning gains. The Bank Index ended the session with marginal gains of 0.24% tad above 41350.

On Monday, the bank index tested the key 50SMA levels however since it had already rallied in the last few days there was a lack of follow-up buying as the indicators were overbought. Also, the traders preferred to book some profits ahead of the mid-week holiday to avoid undue risk from global cues. Going ahead, since we have already seen a trend line breakout, traders should continue to use any dips as a buying opportunity. On the higher side, we see a sturdy wall of resistance in the range of 41700 - 42000 that coincides with the 50SMA and Budget Day high, hence we may see some consolidation before the next leg of up move

The apt strategy would be to buy on dips and book profits at higher levels as long the market consolidates within a range. As far as support levels are concerned, 41100 - 41000 is seen as immediate support

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