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Sensex (54647) / Nifty (16345)

Our markets started the day with a massive bump up beyond 16750 on the back of cheerful mood across the globe. However this seemed overreaction as markets immediately came back to the realistic levels in the initial trade around 16650 in line with what SGX Nifty was indicating. This was followed by a consolidation throughout the first half; but as we stepped into the latter half, the profit booking took place to some extent. Nifty came off sharply to test the 16450 mark in a span of merely half an hour. Fortunately, nerves settled down around it and with the help of a modest recovery at the end, Nifty concluded with weekly expiry tad below 16600 by adding over one and half a percent gains.

It was certainly an action packed day for our markets and although, market erased significant portion of its morning gains during the day, we must construe this as a normal course of action. Because we already had a sharp recovery of 1000 points from Tuesday’s low in merely two days and hence some sort of profit booking was evident after nearing crucial resistances. In fact, with reference to previous commentary, Nifty precisely faced resistance around the mentioned level of 16750. Going ahead, we expect some consolidation in key indices and lot of adjustment would continue to happen in individual stocks. As far as levels are concerned, 16700 – 16750 remains to be a key hurdle and any sustainable move above this would confirm Tuesday’s low as a bottom (last three day’s sharp up move has already given early indication of it).

On the flipside, 16450 followed by 16200 are to be seen as immediate supports. Since the current situation is connected to war kind of scenario, we are waiting for further confirmation beyond certain levels but practically, we have already changed our stance in last couple of sessions. For the coming session, in case of index consolidation, one should focus on stock specific moves, which are likely to continue and can provide excellent trading opportunities.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook - (33815)

Bank Nifty as well started with a huge gap up opening however in the mid-session it started coming off from morning highs and by the end of the session, it erased a major part of gains. It however still ended with strong gains of around 2% at 34476.

On the technical front, RSI has given a fresh buy signal with its smoothened moving average and the prices have managed to surpass the key resistance of 34000 with a gap. However, we are still not out of woods and yesterday’s high that coincides with a 50% retracement level is likely to act as an immediate resistance zone. We sense the bank index may enter a consolidation phase where 33800 – 33500 to act as support whereas 35380 – 35500 to act resistance. In such a scenario, traders should focus on a stock-specific approach however they should avoid carrying aggressive overnight positions over the weekend as the geopolitical tensions continue to loom in the background.

Exhibit 2: Nifty Bank Daily Chart

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