March 13, 2023
Technical & Derivatives Report
We had a gap down opening tad below 40800 on Friday and follow-
up selling dragged the index towards 40350. Finally, we settled the
week with a cut of almost two percent tad below 40500.
The sell-off seen on Friday has certainly dampened the overall
sentiments, especially in the banking index which was clearly
showing resilience in previous couple of sessions. However, we are
currently hovering around the 61.8% retracement of the recent
rally and going ahead, it would be important to see how things pan
out in this week. We expect 40000 – 39700 to provide cushion to
any weakness and banking stocks to provide the helping hand at
lower levels. On the flipside, 40800 followed by 41200 are to be
seen as immediate resistances. A move beyond this would certainly
bring back the strength in this space which can uplift the overall
market sentiments. Next few trading sessions are to be the crucial
one as it would set the near-term path for our markets.
Support 1 – 40000 Resistance 1 – 40800
Support 2 – 39700 Resistance 2 – 41200
Exhibit 1: Nifty Daily Chart
Exhibit 2: Nifty Bank Daily Chart
On Friday, SGX Nifty was indicating a gap down opening and in line
with this, our markets had a big gap down opening. As the day
progressed further weakness was seen to retest sub-17350 levels.
Eventually after some respite Nifty ended a tad above 17400 with a
weekly loss of a percent.
Now, with two back-to-back weak sessions, the momentum is again
in favor of the bears. Despite this, we remain a bit hopeful and
expect important levels to remain unbroken in this week; especially
after seeing prices showing resilience around the 200-SMA and
forming a key technical pattern known as ‘Bullish Hammer’. It would
however be very early to jump to any conclusion and considering
the recent volatility, traders should ideally wait for the trend to
establish. In such a scenario, Friday’s low around 17320 would be
seen as immediate support followed by sacrosanct support at
February's swing low of 17250. On the flip side, the bearish gap left
around 17570 – 17600 should be considered an immediate hurdle.
In our sense, instead of swaying on both sides of the trend, traders
should ideally prefer staying light on positions and keep
accumulating quality propositions in a staggered manner.
Support 1 – 17320 Resistance 1 – 17570
Support 2 – 17250 Resistance 2 – 17600
The weak global cues and underperforming heavyweights
(especially Reliance) were the major culprits in dragging our
markets down. Going ahead, it would be crucial to keep a close
tab on them as any positive development globally, can elevate
the overall sentiments. Also, Nifty Midcap 100 outperformed as
this index ended the week in green, forming a ‘hammer’ pattern
around the recent trend line breakout levels. If the markets find
some relief, we may see many midcap counters giving
mesmerizing moves. Traders are advised to focus on such
counters that are likely to provide better trading opportunities.