Markets had rallied strongly over the past two sessions, outperforming other Asian peers, but the bears were back in action as investors preferred to book profits. Financials, which had spurred a massive rally in broader markets a day earlier, proved to be the main reason for the decline in major benchmark indices, despite buying interest in auto and FMCG stocks. Markets took a breather after yesterday's surge and closed marginally lower. After starting flat, the benchmark ranged and ended around the daily low. Overall, sector indices traded mixed, with gain bookings in banking and finance dragging the indices lower. However, purchases of electricity, consumer discretionary and FMCG packages limited the downside. The broader indices were each up in the 1.5% to 1.6% range. After opening positive, the benchmark index traded with a negative bias all day, showing profit bookings from higher levels. The Nifty50 index closed at 17930, down 0.53%, while Bank Nifty settled at 38067, down 1.47% in one day. Technically, the Nifty50 encountered resistance at 18100 and showed downside momentum, but managed to close above its 50-day simple moving averages, suggesting that a sustained above may show recovery. The index took support from the previous horizontal line and closed above the same, suggesting buyers are quite active. However, momentum indicator MACD is seen trading with a positive crossover on daily charts, indicating upward movement. Additionally, the index managed to close above 21 & 50 - a sustained HMA above may indicate a northerly direction. The Nifty could find support around 17,800 levels while on the upside 18,150 could act as an immediate hurdle for the index. On the upside, Bank Nifty has support at 37700 while resistance lies at 38700. Markets could consolidate after the recent surge and it would be healthy. However, thanks to planned events such as the MPC monetary policy review meeting and the start of the earnings season, there will be no shortage of trading opportunities. Participants should focus on the sectors/themes that are performing well and use the pause to accumulate quality stocks on dips. On the intraday charts, the Nifty has formed a sort of double-top formation, suggesting further weakness from current levels. The index has also formed a bearish candle on the daily chart that is largely negative. However, the medium-term structure of the market remains positive. We believe that as long as the index trades below the 18050 level, the correction could last to 17850-17750. Fresh uptrend is possible only after breakout of 18050 range and could extend to 18130-18200 range.
Resistance: 18150, 18200, 18250
Support: 18000,
17950, 17900
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