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Sensex (56931) / Nifty (16955)

Yesterday morning, we started the day with yet another bullish gap; courtesy to spectacular overnight rally in US bourses. This was followed by a long consolidation in key indices. However individual themes kept moving on their own all this while. Towards the end, heavyweight stocks gained some momentum which pushed the market higher beyond Tuesday’s high. Eventually the Nifty ended the session tad above the 16950 mark.

On Tuesday, we witnessed some tentativeness after nearing the higher end of the downside gap area created on Monday. However yesterday it wasn’t the case. Due to tail end surge in some of the index constituents, we went beyond Tuesday’s high to close firmly around 16950. With this, the bearish gap has now been filled completely. Although most of the oversold stocks are indicating further bounce, it would be a litmus test for bulls around the current levels or may be after entering yet another cluster of hurdles i.e.17000 – 17100 – 17200. As we alluded to in our previous commentary, for us, the downward trend reverses only after surpassing 17200 – 17300. Till then one needs to be very watchful. On the flipside, 16800 and 16700 has now become a strong support at least for the coming session

Traders are advised to keep focusing on induvial themes as they seem to be providing some convincing trades. Yesterday, RELIANCE led from the front with some late dominance from heavyweight private banks. Also it would be unfair if we do not mention the excellent moves in PHARMA stocks.

Nifty Daily Chart

Nifty Bank Outlook - (35030)

Once again, the bank nifty witnessed a gap up opening however there was no major traction for the major part as it traded within a very narrow range. In the last hour, however, buying momentum was seen that pushed the bank index higher to reclaim 35000 on the closing basis.

If we meticulously observe the daily chart, the bank index is trapped within the range of Monday's sharp fall, and even though we have seen a smart bounce we are still not out of woods. The way some of the private banks participated in the last hour this bounce may continue however we do see strong overhead resistance with the bearish gap and 200SMA acting as a stiff hurdle. The said confluence zone of this resistance is seen around 35500 - 35700 levels. On the flip side, support is seen around 34700 and 34300 levels. Traders can continue with a stock-specific approach within the basket that may provide outperforming opportunities.

Nifty Bank Daily Chart

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