
March 06, 2023
www.angelone.in
Technical & Derivatives Report
Bank Nifty had a spectacular week as we saw good recovery initially
after a gap down opening on Monday. It ensured there is no follow
through selling which could have otherwise dampened the overall
sentiments in the broader markets. All intra-week dips were
successfully absorbed by the bulls which eventually turned into a
strong breakthrough move on Friday, courtesy to positive
developments with respect to banking counters. Eventually, the
banking index ended the week on a pleasant note by adding 3%
from previous week’s close.
During the previous week, we highlighted a ‘Dragon Fly Doji’
pattern around the key support of Budget Day low and reiterated
against going short in the markets. Prices did respect this crucial
support and with a strong bounce from there we are now
witnessing a good large bullish candle on the weekly chart. Also,
the prices have closed around a crucial juncture of the Descending
Trendline resistance formed by joining major swing highs
coinciding with 89EMA.
Key Levels
Support 1 – 41000 Resistance 1 – 41680
Support 2 – 40800 Resistance 2 – 42000
Exhibit 1: Nifty Daily Chart
Exhibit 2: Nifty Bank Daily Chart
Our market started the week on a bleak note taking cues from the
weak global bourses, wherein the benchmark index tested the
Budget day’s swing low and dented market sentiments. Nifty
struggled near the 200 SMA throughout the week until the last
session, when a robust recovery was seen in the broader market
space. Eventually, the week closed on a positive note, procuring
0.74 percent from its previous week’s closure and Nifty settled a tad
below the 17600 level.
The upsurge in the Adani group companies post the block deal has
its rub of effect on the PSU Banks, eventually spreading the cheer in
the broader market. From a technical perspective, the recent price
action could be seen as constructive development for our markets
as the index witnessed a modest recovery from the 200 SMA and
made a strong closure on the daily time frame. As far as levels are
concerned, 17500 is now likely to be seen as the immediate support
zone, while the sacrosanct support lies around the 17350-17400
zone, coinciding with the 200 SMA. On the flip side, the bearish gap
of 17770-17800 is expected to act as the sturdy hurdle for Nifty in a
comparable period.
Going forward, we remain sanguine and would advise the
traders to utilize the dips to add long position in the index. The
participation from the high-beta Banking space has provided the
much needed impetus and is likely to continue in the near term.
Simultaneously, one should also keep a close tab on the Mid-cap
space, which is expected to provide immense trading
opportunities in the near period.
Key Levels
Support 1 – 17500 Resistance 1 – 17700
Support 2 – 17400 Resistance 2 – 17800
Considering the strong positive momentum on Friday and the
fresh buy signal in the RSI Smoothened indicator, we expect the
outperformance to continue. Traders are hence advised to
remain upbeat and use dips as a buying opportunity. In such a
scenario, immediate support is seen around 41000 followed by
40800 level whereas 41680 – 42000 is seen as next resistance
levels.