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Sensex (58339) / Nifty (17476)

On Wednesday, Nifty started on a positive note however it lacked followup buying and slipped lower to erase morning gains. Subsequently, it remained in a range for the remaining part of the session to conclude the truncated week with nearly 2% loss tad below the 17500 mark.

It was certainly a bit challenging week for our markets and obviously due to such long gap, market participants chose to take some money off the table and did not carry over aggressive trades. Now if we take a glance at the daily time frame chart, we can see Nifty placed at a crucial juncture. Firstly, the sacrosanct support of ’20-day EMA’ is positioned at 17450 which coincides with the breakout point of previous congestion zone. Hence till the time, Nifty is holding 17400 – 17200, we remain a bit hopeful of some recovery here. We hope there is no aberration on global front in coming days and any favorable cue would certainly be a cherry on the cake. On the upside, 17700 followed by 17850 are the levels to watch out for. If Nifty has to regain any strength, it needs to surpass these barriers with some authority.

Let’s see how things pan out and in our sense, if benchmark has to move higher from here, the banking needs to take the charge (which we are assuming on this occasion). The BANKNIFTY is placed at its rock solid support of 37000 – 36800. A move beyond 38000 would provide the impetus for the next leg of the rally. Apart from this, although broader market underwent some profit booking in last couple of days, we still expect the smaller names to outperform going forward.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook - (37464)

The Bank Nifty index has seen a subdued movement over the truncated week as it settled in red with a mere loss of 0.76 percent on the weekly basis. The index managed to show outperformance over the benchmark index but has lost traction from the market participants.

On the technical parameters, the index is hovering just above the unfilled gap, followed by the cluster of its major exponential moving averages on the daily time frame. The index has been consolidating in a slender range for the past couple of trading sessions, which could be seen as a constructive set up for the counter of forming a base before the next leg of the rally. At present, 37000-37200 is expected to provide a cushion from any sort of correction in the counter. While on the flip side, 38000 could be seen as an immediate hurdle, followed by the recent swing high of 38750 odd zone.

Looking at the recent price action and placement on the daily chart, the index is likely to remain range-bound, till any decisive breach is not seen on either side. Meanwhile, we firmly advocated focusing on a stock-centric approach where one could exploit immense opportunities.

Exhibit 2: Nifty Bank Daily Chart

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