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Sensex (64949) / Nifty (19310)

During the last week, trading began with a downside gap on Monday and due to extended weakness in the financial space, Nifty went on to test 19300 on the same day. Fortunately, a sharp tail end recovery rescued our markets from the crucial support zone. A similar price action was replicated during the remainder of the week. However, with bears maintaining their dominance overall, we concluded the truncated week tad above 19300 by shedding nearly a percent from the previous weekly close.

Although, the correction has not been severe, the Nifty has marked negative close in last four consecutive weeks. The global headwinds and banking related concerns post the RBI policy are keeping our markets under pressure, whereas the inherent strength in other spaces is providing some support at lower levels. To summarize, key indices are stuck in a range and till we do not find any major trigger, the consolidation is likely to continue. If we take a meticulous glance at the hourly chart, we can see ‘Three-point Positive divergence’ in RSI- Smoothened oscillator. This development did trigger some smart recovery around the midsession; but due to lack of follow up, we saw few downticks towards the end. Nevertheless, the structure is still intact and hence, we will not be surprised to see some buying emerging at lower levels (provided there is no major global aberration).

Nifty Bank Outlook (43851)

The Indian equity market saw yet another week of consolidation, with the banking index being a notable underperformer recently. The week started on a cautious note, with tenderness observed between 44000 and 44200 levels. Interestingly, there wasn't any significant selling pressure either during the week; in fact, some resilience was evident at lower levels during the last two trading sessions. Eventually, we ended the fourth week with a decline, settling around 43850.

Technically speaking, no significant alterations were observed on the weekly basis as the index continued to trade within a confined range of merely 600 points i.e., 43600-44200. As of now, the Bank Nifty is oscillating around the 89 EMA on the daily chart and 20 EMA on the weekly chart, which coincides with the immediate support zone around 43500-43700. Currently, it is important to observe a decisive breakthrough above the range of 44000-44200 which would be an encouraging sign for Bulls after such time wise correction. Until this situation, the index is likely to remain in a consolidation phase, with 43500-43700 serving as a cushion against any intraday fluctuations.

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