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Sensex (49159) / Nifty (14638)

We started proceedings for the week on a sluggish note yesterday morning as indicated by the SGX Nifty. The corrective move extended in the opening trades to test the 14800 mark. However this correction eventually turned into a sell off as we saw index literally falling like a pack of cards at the stroke of the first half an hour.

Within a blink off any eye, we were considerately off highs to enter a sub-14500 territory. Fortunately, the fall arrested around the mid-session and there after we had a modest recovery to trim some part of early losses.

At the end, Nifty managed to reclaim 14600 by concluding the session with more than one and half a percent cut. Last Thursday when we concluded the truncated week, things were bright and participation was good across the board. But developments over the weekend with respect to COVID-19 seems to have dented traders’/ investors’ sentiment and as a result, we had a sharp selloff in the first half yesterday. The Dow futures and few Asian bourses were trading quite firm; but this became like an illusion for our traders as we kept sinking right from the word go.

The major culprit in yesterday’s fall was undoubtedly the financial space and it’s now placed at a major support zone, which can now be treated as a ‘Make or Break’ level for the BANKNIFTY in the near term. So, from here on all eyes would be on banking index as it can become a deciding factor for the near term trend. If it manages to hold this, we can see some recovery in the market; however the way things are positioned, a breakdown in the financial space can lead to extended correction in the market.

As far as levels are concerned, we had mentioned how important it is for Nifty to surpass 14900 in order to regain strength. Unfortunately, this didn’t happen and we slid from the sub-14900 levels only. Yesterday’s late recovery was mainly led by the IT heavyweights but it cannot single-handedly lift the market higher continuously. Till the time banking does not participate, the bounce back will not be sustainable in Nifty and hence, for the coming session, 14680 – 14750 are to be seen as immediate hurdles. On the flipside, 14550 – 14440 are to be considered as supports. Traders are advised to stay light and avoid taking contradictory bets till the time volatility does not subside

Nifty Daily Chart

Nifty Bank Outlook - (32679)

We started off the week with a downside gap due to the weekend lockdown announced amid COVID surge. Post opening, strong selling pressure was seen from the word go to drag index below the recent lows of 32415. As the day progressed, the banking index recovered slightly and then consolidated for the remaining part of the day to eventually conclude the day with a massive cut of three and a half percent.

The BankNifty was the major culprit in yesterday’s free fall as most of the heavy weight banking names corrected in the range of 3%-6%. As far as technical chart structure are concerned, we concluded Thursday’s session near the 89 EMA on hourly chart and things were poised for a breakout but due to the developments seen in weekend most of the traders who carried bullish bets found themselves trapped and hence we saw sharp fall post opening.

The BankNifty is now placed around very crucial levels (around 89EMA in daily chart which recently acted as demand zone) and follow-up move in today’s session shall dictated near term directional move. Hence, all eyes especially on banking index now, traders are advised to remain light on positions until we see some clarity.

Nifty Bank Daily Chart

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