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Sensex (53424) / Nifty (16013)

The overnight correction in US bourses indicated a weak opening in our market yesterday morning. Market recovered towards Monday’s close in the initial hour which was followed by one more round of selling to sneak below the 15700 mark. However, as we stepped into the penultimate hour, we witnessed a strong buying interest across the board; resulting in a V-shaped recovery not only to surpass morning’s high but also to go past the psychological mark of 16000 on a closing basis.

Since the second half of Monday, we changed our stance from aggressive bearish to neutral after reaching the crucial zone. Although we are not concluding whether the bottom is made, we were a bit skeptical of Nifty sliding below 15700 yesterday and hence, rather than getting carried away with intraday momentum, we remained firm and expected some recovery in the market. In fact with reference to our previous commentary, the oversold counters gave lot of false breakdowns which eventually resulted in a sharp recovery towards the end. This is the typical behavior of the market which we generally see after sharp corrections and importantly after nearing strong supports. For the coming session, we would keep a close watch on 16100 – 16200. On the flipside, 15850 and 15700 are to be seen as immediate supports. We reiterate, in worst case scenario, Nifty is unlikely to go below 15500 – 15200 and since we are very close to it, we would continue to follow ‘One step at a time’ strategy.

Nifty Bank Outlook - (33158)

Once again we started with a gap down opening and the bank index remained under pressure to slip below its previous session low and mark intraday low of 32155. Fortunately, we witnessed a bounce back in the penultimate hour to not only recover morning loss but to eventually end with gains of 0.87% at 33158.

With yesterday’s bounce, the bank index has snapped its losing streak and this was very much on the cards as we stated in our previous outlook that the key oscillators have entered the oversold zone. Now if we have some coolness on the global front then we can expect this bounce back to extend however the previous support around 34000 is likely to act as strong resistance. On the flip side, 32000 levels remain a strong support zone. In such a scenario, we sense trading opportunities in the stock front is likely to be seen on both sides and hence traders should focus on it but need to be very fussy in their stock selection.

We advise traders to keep focusing on individual themes and within this, one needs to identify apt counters which can perform well in the extended recovery. By saying all this, we cannot completely eliminate the uncertainty with respect to Russia and Ukraine. It continues to loom over and hence one needs to avoid aggressive bets overnight till the time it settles down completely

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