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Sensex (51942) / Nifty (15635)

Nifty started the session marginally positive and inched higher towards the 15800 mark around noon. The market breadth was positive and just when it looked that the index is geared to surpass that hurdle, it took a U-turn and declined sharply. Before anyone could realize, Nifty corrected almost 200 points from the high and then even entered sub15600 level. With a mild recovery from intraday low, Nifty ended the day with a loss of over 100 points at 15635.

The markets looked quite firm till noon, as the breadth was firmly positive with a broad market participation. However, it witnessed some shakeout post mid-session as some profit booking led to a sharp decline from the highs. In our recent market outlook, we have been mentioning about the importance of the resistance zone of 15770- 15800 for Nifty as it is the 127% retracement of the recent corrective phase. Market have rallied one way in last three weeks and hence, some profit booking around such important resistances are generally encountered. Also, recently the hourly ‘20 EMA’ was acting as a support on intraday declines in Nifty and the prices breached that support and ended below it yesterday. However, this should not be taken a sign of any trend reversal and it should be read just a correction within an uptrend.

With spike in intraday volatility, it could be difficult for day traders to gauge the direction on the weekly expiry day and hence one should avoid aggressive positions. The immediate support for Nifty is placed in the range of 15500-15450 while resistances will be seen around 15700 and 15800.

Nifty Daily Chart

Nifty Bank Outlook - (34800)

The banking index opened flat yesterday and after some initial indecisive swings, started moving northwards. In the first hour itself, the sharp uptick in the banking space pushed it higher towards 35400, nearly 500 points higher from the initial low. It was well poised for a pleasant day yesterday but all of a sudden post the midsession, the market took a nosedive and banking being the high beta space, was off nearly 700 points from day high before any could realise it. Since there was no major recovery seen in the remaining part of the day, the BANKNIFTY ended with eight tenths of a percent loss.

The financial space has been the weakest link of late and if we talk about levels, 35500 – 36000 has been acting as a sturdy wall. It made several attempts to go beyond it but every time it reaches closer to it, some sort supply tends to come. Finally, this failure resulted in a sharp decline as we saw BANKNIFTY closing below 35000 after 10 trading sessions. With yesterday’s move, it has challenged it’s ’20-day EMA’ level of 34600 and if it sustains below it in the forthcoming session, we may see this profit booking move extending towards 34200 – 34000. On the flipside, 35000 – 35200 are to be seen as immediate resistances. Traders are advised to stay light and should avoid aggressive longs till the time we do not surpass 36000 convincingly.

Nifty Bank Daily Chart

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