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Sensex (54278) / Nifty (16238)

Two months’ of boredom finally came to an end as market kick started the August month with a bang. There were several attempts made recently to reach the millstone of 16000 but every time global markets became a spoil sport. This time it was certainly not the case. We had complete support from the global peers which provided impetus to reach the magical figure of 16000. The moment we surpassed and sustained above it, there was no looking back. Barring Friday’s muted session; the Nifty had an excellent week to add more than 3% to the bulls’ kitty to hasten towards the 16300 mark.

During the previous week, the Nifty had a smart recovery from the lower range; but banking index kept sulking throughout. As everyone knew, if Nifty had to reach new highs, it wouldn’t have been possible without the contribution of this heavyweight space. Fortunately it didn’t disappoint this time; courtesy to initial charge from the ICICI Bank and then it was all SBI and HDFC Bank’s show to reach the higher boundary of BANKNIFTY around 36000 – 36200. This space cooled off marginally towards the fag end, but despite this, all eyes on this high beta index; because any sustainable move beyond 36200 would result in an extension of its rally towards its record high. This will certainly bode well for the bulls as we may then see Nifty reaching or even moving beyond the next milestones of 16400 – 16500.

Although, the upward trend has just resumed after a long consolidation, we would advise short term traders to start lightening up positions if Nifty reaches the mentioned levels in coming days. Because prices have now started moving far away from some key moving averages on the Quarterly time frame charts. We are not at all advising to go against the current trend; but at least taking some money off the table on existing positions is always a good ploy. As far as supports are concerned, 16200 followed by 16000 are likely to be considered as key levels for the benchmark; whereas for BANKNIFTY, the similar zone is visible around 35500 – 35200. The momentum traders are advised to take one step at a time and follow a proper risk management.

Nifty Daily Chart

Nifty Bank Outlook - (35809)

On Friday, Bank Nifty started on a sluggish note and as the RBI policy was been announced tried to bring some positive momentum breaking above the 36000 levels. However, a follow-up move was missing that dragged the bank index back towards the opening levels. Eventually, after consolidating in a range for the second half the Bank Nifty ended flat tad above 35800 levels.

After a strong mid-week gains, Bank Nifty witnessed subdued move in the last two sessions and in spite of key monetary policy there was no major traction. On Wednesday, Bank Nifty witnessed a breakout above 36000 levels however lacked follow up buying. Going ahead 36000 - 36200 remains a key level and next level of momentum move can only be seen on a sustained trade above the same. On the flip side, bullish gap left on Wednesday around 35200 - 35300 is the immediate support zone. Traders are advised to continue with the stock specific approach keeping a tab on the above mentioned levels.

Nifty Bank Daily Chart

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