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Sensex (56598) / Nifty (16859)

The weakness in the Asian market led to a gap down opening for Indian equities. The benchmark index tumbled nearly 150 points at the opening bell, setting a bleak start. Though the buying was quite relevant at the lower levels, that gradually pulled the indices upwards by the mid-session. However, the bulls could not cope up at the higher grounds, and the index tumbled to the day’s low by the end of the session. With all the hustles, the benchmark index concluded the sixth consecutive day in red with a cut of 0.87 percent.

Technically, the positive structure has been shaken a bit as the psychological support of 17000 got breached decisively. Also, the closure below the 200-day SMA has dampened the overall sentiments, implying weakness in the comparable period. However, the formation of the ‘Inverted Hammer’ candle on the technical chart could be seen as a ray of hope for a reversal from the ongoing selling saga. As far as levels are concerned, the unfilled gap of 16750-16650 is to be seen as the next potential support. While on the higher end, the 17000-mark followed by 17200 is likely to be seen as immediate resistance for the index.

Nifty Bank Outlook (37760)

The global markets once again became the spoilsport as we witnessed yet another gap down opening in our markets. Banking being the weakest sector in last three sessions, corrected sharply towards 38000 in the initial trades. However, the tentative bulls showed some resilience in the first half by giving some cushion at lower levels. This wasn’t enough as the overall sentiments were extremely weak and hence, the BANKNIFTY went on to conclude the session with another one and half a percent cut.

Markets are oversold but they are reluctant to trigger a sustainable relief rally. Taking a glance at the daily chart, the BANKNIFTY has reached its rock solid support zone of ‘89-day EMA’ as well as the ‘20-week EMA’. Hence, considering the extreme oversold condition, we will not be surprised to see the bounce back anytime soon. It would be difficult to time it, but price-wise there wouldn’t be better place to give some relief. As far as support is concerned, 37500-37300 is to be seen as immediate zone; whereas on the flipside, a move beyond 38000-38100 would result into some sharp recovery in this beaten down space. Traders should avoid shorting here, rather look to accumulate quality banking names with a short term view.

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