By Anand James
Though about 50% of the sectors in the F&O space ended in the red over the week, 41% of the stock futures registered short covering, while an additional 21% witnessed long buildup, tilting the bias in favour of bulls, next week. Moreover, though the Nifty has fallen sharply over the week, only 15.6% of the NSE500 stocks have fallen below their respective lows of 1 June 2023, when the Nifty saw its recent low.
BSE Sensex is likely to see downtrend slowing down from here on with support seen at 63,700. Sustained rise in the Sensex options volume over the last few weeks, especially on Fridays, augurs well for the index.
For Bank Nifty, a return to the lower Bollinger band after bouncing off the same early this month signals an extension in downtrend, potentially aiming for 42,700. We will require a pull back above 44,700 to overturn such bearish vibes. Meanwhile, PSU bank index had registered a strong close on Friday, despite the benchmark indices ending in deep red, raising hopes that the positivity of the state owned banks in the Bank Nifty index could prevent a free fall in Bank Nifty.
Meanwhile, USDINR’s dips to Rs 82.65 found enough support last week, raising hopes of reviving upswing attempts towards Rs 82.90. Break of either extremity is expected to trigger a sizable move, with Rs 82.4 and Rs 83.26 identified as critical levels on either side. The reason why we are still circumspect despite being closer to record peak, is that we have had multiple forays into this region, ever hitting record peak in October 2022, only to see momentum fizzling out, and sharp corrections unfolding not long thereafter. Nevertheless a triangular continuation pattern as well as momentum is in upside’s favour. But a turn back below Rs 82.4 could puncture upside hopes.
(Anand James,Chief Market Strategist at Geojit Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)
