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Sensex (59331) / Nifty (17604)

On Wednesday, some unpleasant news related to Adani group triggered the selloff in the banking counters, which augmented on Friday as well. In fact, the entire Adani conglomerate just plummeted like a bottomless pit. In this process, we not only thrashed 17750 but also went on to hasten towards the 17500 mark. Eventually, with some modest recovery in the end, the Nifty concluded the dreadful week at 17600 by shedding over a couple of percent on a week-on-week basis.

In this week, the Finance Minister is going to present the Union budget and mostly, market prepares itself for this mega event. This time, the fiasco in last two days has dampened the overall sentiments and certainly disrupted prices across the board. From an optimist point of view, it’s good that the market is approaching this event on a lightener note and any favorable outcome, would lift the markets higher. On the other hand, a slight disappointment would lead to further aberration in the market. Let’s see how things pan out going ahead

Looking at the daily chart, we can see prices gyrating in a ‘Falling Wedge’ pattern and have managed to retrace back to the lower end at the close. Considering the ‘Positive Divergence’ in ‘RSISmoothened’ oscillator, we may expect some recovery from lower levels. As far as levels are concerned, 17500 is to be treated as immediate support and a slide below this would extend the correction towards the ‘200-day SMA’ level of 17300 – 17200. If this happens then investors / traders are advised to start nibbling into quality propositions. On the flipside, 17700 – 17800 are to be seen as strong hurdles. If market has to regain strength as well as confidence, Nifty needs to surpass 18000 on a closing basis. Traders are advised to keep a note of all the above scenarios and should ideally remain light ahead of the event.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook (40345)

The banking index tumbled over 5 percent in the week amid the carnage caused due to Adani group companies and has dented the overall sentiments. The index has prominently underperformed the benchmark index and witnessed a massive sell-off in the last two trading sessions to conclude to week around the 40350 level.

On the technical aspect, the index has made a strong bearish candle on the weekly chart and has plunged to test the bullish gap of 40208-40355 on the daily chart, indicating intense selling pressure in the overall space. As far as levels are concerned, any breakthrough below the mentioned levels could drag the index to the next support of 61.80% Fibonacci retracement, placed around the 40000 zone. On the contrary, the immediate hurdle could be seen around the 50% Fibonacci retracement around 40800, followed by the bearish gap of 41415-41540 odd zone. Hence, one needs to keep a close tab on the mentioned levels and avoid aggressive trade in the index for the time being.

Exhibit 2: Nifty Bank Daily Chart

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