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Sensex (60923) / Nifty (18178)

The global markets were a bit stable and as a result, our markets opened with a decent upside gap yesterday morning, exceeded the SGX Nifty by a fair margin. However it was merely a formality as we not only saw Nifty erasing all gains but also went on to slide below 18100 during the penultimate hour. Fortunately due to late recovery in some of the heavyweights, Nifty managed to recover fair bit of ground to conclude the weekly expiry tad below the 18200 mark.

Clearly, the Nifty constituents other than financial stocks are weak and they are leading the correction in the index. However, the banking stocks seem to have different plans. They did not fall much in last couple of sessions and in fact, when Nifty was about to knock the crucial support of 18000, the banking counters came for a rescue. There was complete gush seen in the banking space in the last hour of the trade, which led BANKNIFTY to close above the new millstone of 40000 with some authority. If banks had not shown this mesmerising move yesterday, the Nifty would have certainly breached the 18000 mark. Now two major indices are showing complete divergence, so going forward it would be interesting to see whether the BANKNIFTY’s strength lifts Nifty higher or vice versa. Hence, all eyes on the banking space going forward; because a follow up move from hereon will certainly lift the overall sentiments in the market.

As far as levels are concerned, 18060 – 18000 are to be considered as crucial supports; whereas on the flipside, 18260 – 18400 would be seen as immediate hurdles. Since the midcap index is still showing some weakness, we advise traders not to create aggressive longs in high beta counters. Yes the thematic approach can still be followed, but one needs to be very selective now.

Nifty Daily Chart

Nifty Bank Outlook - (40030)

Post Wednesday’s flat close, we began the weekly expiry session with an optimism and maintained its positive posture for the major part of the day despite the benchmark index remained in a pressure. In the final hour, we saw smart buying interest in banking index to hit fresh records and conclude at the highest post ever tad above 40000 mark.

So far it was an interesting week must say, the benchmark index kept sneaking its supports but the BankNifty clearly surprised market participants by not only standing firm but also registering fresh record highs. Clearing banking index acted as a savior for the Nifty, otherwise we would have certainly breached the important psychological support of 18000. Going ahead, all eyes would be on the follow-up action in this particular space as they may dictate the upcoming directional move. The KOTAKBANK outshined yesterday and was the major contributor by rallying more than 6% and few PSU banks also showed fabulous run.

Nifty Bank Daily Chart

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