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Sensex (58466) / Nifty (17417)

The SGX Nifty was indicating a pleasant start for the week in line with cheerful global bourses. However we did not open with the same positivity and in fact gave up all gains in the initial trades itself. As the day progressed, the selling augmented across the broader market to break all intermediate supports one after another. During the final hour, market managed to minimize the damage; but still ended the session with nearly a couple of percent loss.

With yesterday’s correction, Nifty marked the weakest session in last eight odd months. Throughout last week, our market was feeling the pressure and kept sliding gradually towards the key support of 17700. Technically this level was important because it coincided with the crucial neckline support of bearish ‘Head and Shoulder’ pattern which formed over the past couple of months. With reference to our recent commentary, we had anticipated formation of this pattern and yesterday finally it got confirmed as we convincingly closed below the neckline of the same. Yesterday’s massive fall finally validates our recent cautious stance on the market. Yesterday’s low precisely coincides with the daily ’89-EMA’ and generally we consider this as a sheet anchor for prices. But this time, we do not expect it to play similar kind of role for the market. We may see small rebounds since market is a bit oversold, but the possibility of extending this correction is pretty high.

After 17250, the Nifty is likely to continue this weakness towards the psychological level of 17000; where one need to reassess the situation. On the flipside, 17500 – 17650 are now to be considered as immediate hurdles. Traders are advised to use in between recoveries to lighten up longs and don’t be in a hurry to make bottom fishing.

Nifty Daily Chart

Nifty Bank Outlook - (37976).

Post a long weekend, the bank nifty started on a positive note in fact above the Thursday’s high. However, it slipped lower right from the word go and the selling pressure got intense to break one by one key support levels with ease to mark an intraday low of 36655. Eventually, with some modest recovery in the fag end the bank index ended with a loss of 2.23% tad at 37129.

The bank nifty has been a clear under performer and the way it slipped yesterday the bears are definitely in strong momentum. Since we have already witnessed a decent correction from all time high in a short span of time the oscillators are in oversold territory hence we may see some in between bounce. However as highlighted above the momentum is gripped by bears and the bounce are likely to be short lived. Hence, we advise to lighten up longs in case we see any bounce. In such scenario, immediate resistance can be seen around 37600 – 37800 levels. On the flip side, support is at 36600 and 36200 levels.

Nifty Bank Daily Chart

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