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Sensex (58787) / Nifty (17511)

Post some wild moves in the initial part of the week, Nifty traded in a range for the last two days and eventually ended around 17500 with gains of 1.80% against the previous week's close.

If we recall our last week’s outlook, we had clearly mentioned that the benchmark may see a further consolidation between 16800 - 17500 before heading for the next leg of the action. This is precisely what has happened during the last week as Nifty almost tested the lower end and closed at the mentioned higher range. Now if we analyze the last two days trading activity; buying was definitely seen on the intraday dips. However, we did see some tentativeness at higher levels as the benchmark has already rallied more than 3% from the intra-week low and has reached a cluster of resistance zone seen in the vicinity of 17500 - 17600 - 17700. During the week, we did participate in the relief move but directionally, we are still a bit skeptical whether the market has enough strength to surpass the higher boundary of this range. Hence, one needs to now start lightening up longs if Nifty extends the relief move in the coming sessions. On the flip side, we sense the base has shifted higher and the bullish gap left on Wednesday at 17250 - 17300 is to be seen as key support.

During the week, we witnessed many astonishing moves in midcap and small-cap stocks and traders can continue with the stock-centric approach; however they need to be very selective going ahead as we are approaching the resistance zone.

Nifty Daily Chart

Nifty Bank Outlook - (37106)

Similar to the previous session the Bank Nifty started on a flat note and then consolidated within a range for the major part of the session. In the penultimate hours however buying was seen from the lower levels to eventually end flat tad above 37100.

On Thursday, we mentioned a bullish formation known as Island reversal; ideally the positive momentum post this formation should have been swift. However, the last two sessions have been lackluster without any major traction that certainly questions the credibility of the above formation. The island reversal scenario remains intact as long prices hold the support of 36820 however a failure to hold the same may trigger weakness back towards the 36000 levels. On the flip side, overhead resistance is seen at 37800 - 38000 levels. While during the initial part some of the private banks outperformed on Friday it was PSU banks that showed strong gains. Traders are hence advised to have a stock-specific approach within the basket that may continue to give outperforming opportunities.

Nifty Bank Daily Chart

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