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Sensex (54334) / Nifty (16245)

On Friday, the global worries once again spooked market participants to challenge 16200 on an intraday basis. Although it ended the week tad above it, the Nifty confirmed a lowest close in last seven months. Friday’s correction was no surprise to us as the consolidation in previous three sessions was clearly hinting towards the new round of selling and this is what we witnessed throughout the day

Now if we meticulously observe Friday’s price action, we can see moderate damage in key indices, but individual stocks were falling like a bottomless pit. Hence although markets are oversold since last few days, there is no respite overall and of course we cannot forget, this correction has lot to do with the geopolitical concerns with respect to Russia and Ukraine. So, till the time things do not stabilize there, market is likely to sway on news flows. Hence one should certainly brace up for similar volatility and surprises on either side. Although such war kind of scenarios are always tricky, we can clearly see negative trend on weekly time frame charts. In addition, the falling slope of ‘RSISmoothened’ oscillator is an indication of further weakness. So, although Nifty has reached to our initial target of 16200, we do not want to pre-empt any near term bottom here.

From an investors’ point of view this is certainly an excellent opportunity to bag quality propositions in a staggered manner; but for traders, it would be difficult to say that worse is behind us. We do not want to sound too pessimistic but looking at the current scenario, we will not be surprised to see Nifty entering sub-16000 terrain. In a worst-case scenario, we do not expect Nifty below 15500 – 15200 as of now. Let’s see how things pan out going ahead and obviously all eyes on global development. In case of any positive surprise next week, we would be keeping a close eye on few scenarios. As far as levels are concerned, 16000 – 15900 is to be seen as immediate supports; whereas on the higher side, 16450 followed by 16600 are to be considered as strong resistances. We reiterate, the pragmatic approach would be to follow stock specific approach (identifying apt theme is the key) and should avoid aggressive bets overnight for a while.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook - (35228)

The Bank Nifty index has plummeted 5.55 percent in the previous week and has shown significant underperformance. The selling has dragged the index towards the previous swing low and concluded the week at 34408 levels.

On the technical front, all the indicators have turned southwards as the bears turned on their furious mode. As far as levels are concerned, the previous swing low of 34000 odd levels could be considered the last technical support, breaching which things could worsen and attract fresh short positions towards the 33000 zone. On the contrary, 35000-35200 is expected to act as an immediate hurdle, followed by the sturdy wall of 200 DEMA placed near the 36200 0dd zone. The disruptor of technical setup and the influence of the ongoing global crisis, the further movement of the index remains tentative. Hence, it is advisable to stay cautious till the scenario looms over and avoid aggressive bets in the banking space for the time being.

Exhibit 2: Nifty Bank Daily Chart

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