Nifty PSU Bank index’s 4% jump on Friday appears to have jump started a recovery in the broad market. The sharp rise in PSU bank index comes after a prolonged sell off that had begun even before Nifty cracked. The PSU banks constituents in the bank nifty has also helped the index get enough elevation that could be considered more than just a dead cat bounce. This encourages us to look for 43,000-43,360 on the Bank nifty index this week, with downside markers placed a tad below 42,600.
Meanwhile, Nifty registered a turn from the oversold territory that it had found itself on Thursday, after a prolonged selling for six consecutive days, and appeared to some as heading for a bottomless pit while it lasted. Both the nonstop decline as well as the turn on Friday could be explained by 200 DMA which remained the target and thereby a point for reversal, after the penetration of 19,500 triggered panic selling. Friday also saw the November derivative series becoming active, also aiding a bounce-back that has now retraced about 23% of the fall. This retracement could stretch as far as 19,150 as well, while momentum could even push the recovery move to 19,420 which is from where bears could mount fresh challenges in the days ahead. Alternatively, inability to hold above 19,050 or a direct pull back below 18,900 would also ensure that the 200 DMA at 18,600 is tested. Breach of the same would bring the worst case scenarios into the picture, with 17,000 as the likely objective, but this is least favoured at the moment.
Sensex appears similarly positioned as Nifty, having bounced from the 200DMA vicinity. We could look for 64,800 in the coming week, while riding on the Friday’s bounce back, a return below 62,800, the 200 DMA could announce that the bears are regaining control, especially as most oscillators are yet to confirm an upside turnaround yet.
USDINR meanwhile, is enroute its umpteenth attempt to breach the 83.4 mark. Disappointingly tight trading range and lacklustre moves had discouraged upswing attempts and the currency pair had drifted lower earlier, in search of a better launchpad for renewed upmoves. This it found, after slippage towards the 83 mark. The upswing thereof now faces challenges from the 83.3-83.4 marks, before it could embark on an 84.7-85 move.
First published in Financial Express