Last week was brimming with activity. Nifty tested one more milestone of 18600 yet could barely stayed there as we have seen sharp selling from there to drag index under 18050. The index option gamma writers ran for cover as the India Vix saw a sharp downtick. Nifty Index underperformed the Bank Nifty Index by ~3.5% on account of an unwinding of long positions, to close the week in the red. Banking stocks like ICICI Bank, Kotak Bank & HDFC Bank were among the top outperformers during the week.
LAST WEEK’S MARKET SUMMARY
Markets finally took a breather ending its winning streak for the two consecutive weeks, to close in red as across the board profit booking weighed in. Rupees 8 lakh crore wiped out from investors’ wealth during the period. Nifty index underperformed the Bank Nifty index by 3.5% on account of an unwinding of long positions, to close the week in the red. On weakly basis, Nifty index closes down 1.26% but Bank Nifty outperformed the Nifty and ended 2.46% higher. Banking stocks like ICICI Bank, Kotak Bank & HDFC Bank were among the top outperformers, witnessing an addition of long positions.
Now the major question that comes to our mind is that, why did Bank Nifty outperform Nifty last week?????
Bank Nifty outperformed Nifty as financial stocks continued to remain upbeat led by improved visibility of credit growth and ease in asset quality concerns. However, most key sectoral indices remained under pressure. Metals stocks witnessed steeper correction, while FMCG, IT and Pharma indices witnessed correction of more than 1%.
On the sectoral front,
Banks again found favor among investors due to their reasonable valuations as compared to the broad market. On weekly basis, The Nifty PSU Banks and Nifty Financial Services index closed at 3.83% and 1.81% higher.
Nifty Metals & Nifty Reality sector are top losers on weekly basis, closing 5.60% and 5.31% down respectively. Metal company stocks were under pressure as volatility in base metal prices around the globe is turning into a matter of concern for market players.
During last week both FII & DII were the net sellers as FII sold 4656 crores worth of shares while DII sold 5535 crores worth of shares.
Major weekly Gainer and Loser of Nifty 50
Kotak Mahindra (up 7.70%) & Tech Mahindra (up 6.10%) were among the top gainers of the week.
Asian Paints (down 9.54%) & HINDALCO (down 8.83%), Reliance (down 2.88%) were among top losers of the week.
Now, what’s next?
On a daily time frame, the Nifty index forms a falling wedge pattern which indicates bullishness. But on the weekly charts, the Nifty has formed a bearish dark cloud cover candlestick. This pattern indicates a possibility of a continued profit booking, so be cautious, as more volatility can be seen in markets in the upcoming week.
Technical View of Nifty and Bank Nifty
Despite a positive opening last week, domestic indices slipped into bear’s grip for four consecutive trading sessions led by profit booking in most sectors.
Nifty lost the two-week gaining momentum and ended lower amid volatility despite hitting fresh record highs, dragged by selling seen in the mid and small-cap stocks.
On the daily time frame index forms a falling wedge pattern which indicates bullishness in upcoming days.
Index completes its 50% retracement from the top on the daily time frame and the Overall trend of the index is very strong and bullish.
Index continued to hold above 20 days EMA, and all the fall toward that average is good bounce.
For day traders, 18050 would be the sacrosanct support level and above the same, a pullback rally could be seen up to 18300-18350 levels. On the flip side, the dismissal of 18050 could trigger one more leg of correction up to 18000-17975.
Weekly support and Resistance
As far as levels are concerned, the upside in the coming week of 18600 is a hurdle for upside.
On the flip side, 18000-17900 is to be seen as key supports. The first sign of weakness would be visible only after breaking this lower range.
Nifty Futures Strategy for the day
Resistance at 18250 and Support at 18060.
Strategy – Either buy above 18250 for the targets of 18310—18380 or Sell below 18060 levels for the downside targets of 18000—17940.
Bank Nifty started the week on a positive note and formed a range. After breaking the range it has made all-time high, also ended the week on a positive note.
The market may struggle to hold its foot next week and is likely to stay range-bound. After exceeding the 40,000 mark for the first time this week, Bank Nifty is likely to be in the limelight next week as various banks announce their results. So far ICICI has posted good results and that may push bank nifty further.
The wider trading range in Bank Nifty futures is more than 1180 points last week.
Weekly price action has formed a green bullish candle. Technically this shows a bullish momentum in the index.
Momentum indicator RSI also gave closing above 78 on the weekly time frame. This indicates a bullish momentum in upcoming days.
Weekly Support and Resistance
As far as levels are concerned, 40590 is a hurdle for upside above that we may witness fresh rally in Bank Nifty.
On the flip side, 40040–40000 is to be seen as key supports. The first sign of weakness would be visible only after breaking this lower range.
Nifty Bank Futures strategy for the day
Resistance at 40590 and Support at 40190
Strategy – Either buy above 40590 for the targets of 40760—40900 or Sell below 40190 levels for the downside targets of 39900–39750.
Top Stock Recommendations for the upcoming week
IFB INDUSTRIES (CASH)
We have seen a strong breakout on the daily chart as well as on the weekly chart in the last trading session in IFB Industries stock. Now we will expect a major upside move-in days to come.
Strategy – Traders can initiate their buy position on dips around 1265–1260 for the upside target of 1340 and then to 1380. Support and stop loss will be below 1180.
HINDUSTAN UNILEVER (FUTURES)
HINDUSTAN UNILEVER is taking good trend line support on a daily timeframe and also taking support from 200 days moving average, we can expect a decent upside move in the coming days.
Strategy: Traders can buy this stock around 2440 for the upside move till 2525 and then 2600 levels in coming days. Support and stop loss will be below 2400 on a closing basis.
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