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Sensex (62678) / Nifty (18660)

On Friday, we had a nervous start in line with the weak global cues. Subsequently, there was recovery during the mid-session to recover all the lost ground. However, during the penultimate hour there was one more round of sell-off that remained towards the end to eventually end with loss of 0.79%

The benchmark index Nifty has now sneaked below the key swing low of 18350 on a closing basis. Ideally looking at the price structure, the development does not augur well for the bulls. A close below this support opens the possibility of extended correction in this week. We may be biased, but we are still not convinced with this close. Only a follow through selling may lead to further weakness towards 18130 - 18000 - 17900 in coming sessions. Even if this scenario pans out, we do not expect the correction to aggravate below the lower end of this support range. The higher degree up trend remains intact as long as we manage to hold this. Since market was deeply overbought, we must consider this as a running correction. On the flipside, 18450 - 18600 are to be treated as immediate hurdles. If bulls have to regain their strength, 18450 needs to be surpassed with some authority, which will negate the breakdown from small ‘Head and Shoulder’ pattern on daily time frame chart.

Nifty Bank Outlook (43219)

The stellar up move in the banking space has come to a halt post ten weeks of consecutive rally. The sell-off in the last two trading sessions has led the Bank Nifty index to plunge towards the 20 DEMA on the daily chart and snapped its winning streak. The index concluded the week with a cut of nearly a percent and settled a tad above 43200 levels.

On the technical front, the cycle of higher highs – higher lows is still intact, but the narrowing down of the momentum signifies the tiredness in the bulls. As far as levels are concerned, 43000-42800 is the intermediate support, followed by the sacrosanct support of the unfilled gap placed around 42550-42500. On the flip side, 43650-43700 is likely to act as immediate resistance, breaching which the index is expected to reclaim its lifetime high zone in the comparable period. The index is placed at a crucial level and one needs to keep a close tab of the mentioned levels for the time being.

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