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Sensex (52728) / Nifty (15669)

The positive momentum from the weekly expiry session continued on Friday as we witnessed a gap up opening that extended gains throughout the session to eventually end the week on a high note with gains of over 2.5% against the previous week’s close.

Although previous week’s sharp correction was intimidating, we were not convinced with a possible extended correction this week. In fact, we had mentioned couple of observations like Nifty reaching the previous breakout point of May 2021 around 15400 – 15300 and the ‘Positive Divergence’ of the ‘RSI-Smoothened’ oscillator on the daily chart (i.e., lower lows in recent prices and higher lows in the oscillator). With the sharp bounce back, we are now back to 15700 which was the recent breakdown point and hence, market has now entered a corridor of uncertainty. Yes, we agree to the fact that we are still not out of the woods yet and till the time Nifty does not surpass its major hurdle of 15900 – 16000 on a closing basis, one should avoid aggressive bets on the long side. Hence, it would be interesting to see how market behaves in the first half of this week. If global relief extends, we may see Nifty surpassing the 16000 mark and this would certainly trigger a sharp short covering rally in the market. Before this, 15800 – 15900 – 16000 is to be considered as a cluster of resistance.

On the flipside, the immediate supports are placed at 15500 – 15350 – 15200. We would also like to highlight one thing, if Nifty manages to close beyond 16100 this week, it will confirm its quarterly close above ‘5-EMA’. The significance of this development is, historically, whenever benchmark index closed below this key average on quarterly chart, it has triggered sizeable correction after that. Last time it had happened in initial covid fiasco and before that way back in 2011. Hence looking at the broad-based relief this week, we remain hopeful on market obliging this historical observation.

Nifty Daily Chart

Nifty Bank Outlook - (33627)3

The Bank Nifty index has snapped the three weeks of the consecutive selling spree with a positive weekly closure of 2.70 percent. The index has moved in tandem with the overall market and settled at the critical gap zone, a tad above the 33600 level.

On technical aspects, the lower band of the weekly sloping channel has acted aptly in the situation as the index showcased the initial sign of reversal. Though the index is placed just below the unfilled gap and until it is not taken decisively, tentativeness could be seen over. As far as levels are concerned, the unfilled gap of 33770-34340 odd zone is likely to be seen as an immediate obstacle, ahead of which some assertiveness could be followed in the coming period. On the contrary, the 33000 mark is expected to cushion any fall, while the sacrosanct support lies around 32300-32400 odd levels. Hence, it is advised to keep a close tab on the mentioned levels and look for opportunities among the beaten-up counters within the space.

Nifty Bank Daily Chart

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