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Sensex (58341) / Nifty (17415)

Tuesday’s smart recovery was followed by a decent opening in line with favourable global cues. After the initial tentativeness, market stabilized and went into a consolidation mode. We slowly and very gradually moved towards the 17600 mark around the mid-session. However all of a sudden market started to feel some heat as we witnessed strong selling pressure across the board to pull the Nifty back to 17400 in a flash, in fact for a moment we even slid towards 17350.

Yesterday, Nifty shed merely half a percent from the previous close but it certainly do not portrays the right picture of yesterday’s intraday activity. The pull back in last one and half days seems to have provided excellent opportunity for the bears to re-enter the market. They grabbed it with both hands to send Nifty back to 17400 at the close. This is exactly what we had alluded to in our previous commentary. We are still not out of the woods and hence one should not fall prey to such in between recoveries. Yesterday’s high of 17600 now becomes a strong barrier for bulls and in fact with a broader view, till the time we do not surpass 17900 – 18000, one should continue with a sell on rise strategy. Today being the monthly expiry, the volatility is expected to be on the higher side and although we continue to remain bearish on the market, it would be difficult to take a call whether we would break the sacrosanct support of 17200 today itself. Yes sooner or later it is likely to be breached to see Nifty retesting the 17000 mark. Before this, 17300 is to be considered as an intraday support.

Market seems to have reversed precisely from the important resistance levels, be it Nifty and Bank Nifty or even the midcap index for that matter. Traders are advised not to get carried away by such recoveries and should avoid taking aggressive longs for a while.

Nifty Daily Chart

Nifty Bank Outlook - (37442)

The Bank Nifty started on a positive note and went on to climb higher levels for the major part. However, along with the broader markets, it slipped lower in the penultimate hour to wipe out a major part of morning gains. The Bank Index eventually ended with gains of 0.45% at 37442.

In our previous commentary, we had clearly stated the bounce back move are likely to be short lived and should be used to exit long positions. This is exactly what we witnessed in yesterday’s session. The bias remains the same and we remain cautious. On the expiry day, the volatility is likely to be on the higher side but in case of any bounce traders are advised not to get trapped in it; in fact should be used to create fresh short positions and exit long positions. In such scenario, resistance can be seen in the range of 37800 – 38000. Whereas immediate support is seen around 37000 and 36600.

Nifty Bank Daily Chart

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