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Sensex (54836) / Nifty (16411)

With a huge gap down on Friday, our markets started around the 16400 mark. Fortunately, due to lack of follow through selling, we did not extend the damage and closed around the opening point.

It was one of the worst weeks in last three months as Nifty shed more than 4% this week. Mostly, global factors tend to trigger such substantial sell offs but, on this occasion, it was initiated due to domestic developments and then to rub salt in the wound, global cues fuelled the corrective move. Honestly speaking, we did not expect the fall to extend below 16500 but when global uncertainty comes, no level is respected. Globally, things have become extremely bleak, and it would be very difficult to assess the situation there. Despite this, we do not want to get carried away and hence, would avoid going short aggressively. If we take a glance at the daily time frame chart, we can see ‘Pennant’ pattern target in the vicinity of 16200 – 16000, which is not far away from current level. Hence, we would rather wait for some reversal in this week. On the higher side, 16500 followed by 16700 are the immediate levels to watch out for. Let’s see how things pan out globally and be hopeful for some sustainable relief on that front.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook - (34591)

Bank Nifty as well started with a huge gap down on Friday, this was then followed by consolidation within a range. Eventually, the bank index ended with a loss of 1.82% and for the week it wiped off more than 4% to end a tad below 34600. During the week gone by, the bank index broke below some of the crucial support levels one by one with ease, and definitely, the bears seem to be in a strong momentum. Now if we see the bank index has already sharply corrected and hence going aggressive shorts at current levels doesn't seems wise. In addition, prices have approached 89EMA on the weekly chart which has historically acted as strong support; having said that doesn't suggest immediately going long in fact one should wait for the volatility to settle to understand the next leg of the move. As far as levels are concerned, 34100 followed by 33570 is the next support zone whereas 35000 - 35200 is the immediate resistance zone. We reiterate to avoid undue risk and be very fussy in-stock selection.

Exhibit 2: Nifty Bank Daily Chart

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