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Sensex (57696) / Nifty (17197)

On Friday, Nifty started on a strong positive note and almost retested 17500 during the early trades. But bears were not willing to give up as they once again showed their dominance at higher levels to erase major portion of weekly gains by ending tad below 17200.

Overall during the last week our market managed to close in the positive terrain; but it was certainly a challenging week for both counterparties. Market was clearly unsure of its direction for the most part of the week. If we look at it from a technical point of view, market is respecting the levels precisely. At the beginning, the Nifty started rebounding after reaching the price target of ‘Head and Shoulder’ pattern of 16800 and on Friday, it became nervous after nearing a stiff resistance zone of 17500 – 17600. Direction wise, we continue to remain cautious and there is no doubt we are still in a ‘Sell on rise’ kind of market. This view will remain intact as long as Nifty does not surpass 17900 which is the confluence point of two key trend lines. Also sooner or later we expect the recent low around 16800 is to be breached soon; but it will happen immediately or after some more consolidation in the range of 16800 – 17500; we need to assess the situation in the coming week.

Meanwhile, traders can continue with a stock specific approach and we may see trades on both sides if Nifty remains in a consolidation mode. But it would be a prudent strategy to keep booking timely profits and considering the volatile nature of global markets, carrying aggressive bets overnight should be strictly avoided. As far as levels are concerned, 17350 – 17500 – 17600 are to be considered as immediate hurdles; whereas on the flipside, 17000 – 16800 should be treated as a cluster of support.

Nifty Daily Chart

Nifty Bank Outlook - (36197)

On Friday, the banking index began the session on a muted note but witnessed sharp uptick to reclaim 36800 in the initial fifteen minute of trade. However, this just turned out to be a formality as index attracted fresh selling at higher levels. The sell-off aggravated in the midst to slowly drag the BankNifty below 36100 and post some consolidation in the final hour concluded the day tad below 36200 with the cut of 0.85%.

We observed strong selling as the Banking index as it entered the vicinity of 36800 and we had been mentioning lately that it’s very important to show upmove beyond 36800-37000 to gain further strength. Considering Friday’s price action, we maintain our cautious stance on market and hence would advocate exiting longs and adding shorts in any pullback moves. On the flip side, immediate support is seen in the range 35900 – 35800 levels.

Nifty Bank Daily Chart

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