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Sensex (52323) / Nifty (15691)

The US markets saw a bout of profit booking after Fed’s meeting and the weakness persisted in the DOW futures early in the morning as well. Taking these cues into a consideration, our markets had a gap down opening below well below 15700. After the initial hiccup, markets settled around 15620 and then had a v-shaped recovery in the subsequent hour. However yesterday the pessimistic participants were not willing to give up as they came harder around the mid-session to retest morning’s low. Eventually, some late recovery pulls Nifty higher to conclude the penultimate weekly expiry tad below 15700.

Yesterday’s corrective move was not a surprise to us as we have been advocating some caution since last few days. Yes, one must accept the fact that the decline was not as severe as it’s generally on the down days. But the way NIFTY MIDCAP 50 index is struggling around the crucial juncture, it does not bode well for the bulls. Moreover, the BANKNIFTY is now standing at the cusp of a breakdown from the ‘Rising Wedge’ pattern on the daily chart. Further aberration in this space would lead to extended correction in our markets and in this process, we will not be surprised to see Nifty sliding below the sacrosanct support of 15600. So do watch out for this development as we are inching closer to the monthly expiry.

As far as Nifty is concerned, 15720 – 15800 is to be seen as strong resistance zone; whereas on the lower side, a move below 15600 opens up the downside towards the next important support zone of 15450 – 15350. Traders are advised to stay light and even if one wants to take stock specific longs, better not to carry leveraged positions overnight.

Nifty Daily Chart

Nifty Bank Outlook - (34605)

We started the weekly expiry day with a downside gap amidst weakness seen across the global market. Post some recovery in the initial hour of trade, the banking index once again attracted selling pressure to hit intraday lows of 34458.10. Eventually, due to fag end recovery the BankNifty concluded the day tad above 34600.

The banking index continued its recent trend of underperformance and has now approached around the support of the ‘Rising Wedge’ pattern on the daily chart and 200 SMA on the hourly chart. It would interesting to see how things pan out in the coming trading session. For the time being, we would advocate staying light and avoiding taking any leveraged positions.

Nifty Bank Daily Chart

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