The market ended unchanged during the extremely volatile session on Wednesday, January 11th. At the close the Sensex was down 9 pips to 60105 and the Nifty down 18 pips to 17895. While markets were range bound, selected bouts of intraday volatility continued to keep investors at bay. The Federal Reserve Chairman's recent speech also signaled no moderation in his rate hike approach, which hurt investor sentiment. Investors remained cautious ahead of the inflation data release, although sentiment was upbeat as global peers attempted multiple rallies in between. Indian CPI for December is expected to remain flat, while US CPI is expected to cool further from November's level of 7.1%. The inexorable selling of FIIs due to the premium valuation of the domestic market weighs on the domestic market. The Bank Nifty index enjoyed a volatile trading session but managed to hold the immediate 42,000 support level. Participants are struggling to deal with the prevailing volatility amid the corrective phase and we do not expect relief anytime soon, citing upcoming events & ongoing earnings season. Currently the market is witnessing non-directional activity and perhaps traders are waiting for the breakout on both sides. The Nifty has seen strong swings in both directions, which is part of the near-term consolidation process. In terms of price patterns, the fluctuations over the past few sessions have resulted in a triangular pattern formation. The Nifty received support on the underside as it neared the bottom of the pattern. 17850 is a key support on the downside. Unless this breaks on a closing basis, the index is expected to bounce back. On the higher side, the immediate hurdle is 17950, beyond which 18000-18100 can be tested in the near term. On the 2-hour chart, the triangle pattern is visible in the 18100-17800 range. We can expect a high level of volatility within this range as the India VIX is also showing above 15 levels. Prices are expected to fluctuate in both directions until and unless they experience a break on either side of the triangle pattern. We therefore reiterate our view of limiting positions and favoring hedged trades. Investors, on the other hand, should view this decline as a buying opportunity and gradually build up quality stocks on dips. Banknifty is likely to remain volatile in the upcoming session and a break below 41500 will accelerate the move down. The upper end of the middle resistance zone is seen at 42300-42500 and short coverage is expected towards the 42800 level.
Resistance: 17950, 18050, 18150
Support: 17850, 17750, 17650
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