Last week we suspected weakness early in the week and the Nifty sold off early and managed to hold the second support highlighted near 8290 before the big Friday rally. As in last week we continue to see 8530- 8555 Nifty spot resisting the market advance again this week.
Outlook :
The series of April saw a vwap of 8490 and our immediate attention in the coming week would be to see how the market behaves over this April vwap point. Having said that we maintain resistance of 8555 if we do cross over this vwap during the week. Only a high volume move can show us 8620 spot in the coming week. However inability to cross over 8490 would mean rotations down to 8351- 8305 during the week.
Nifty Spot :
In the Past two weeks we saw the Nifty holding up the weekly value high from the week of 11/05 well. The week however finished inside and value was developed sideways during the week.
We wait for a firm push above 8490 as confirmation of the Bullish intent.
The charts continue to show a low volume zone at 8555 and higher near 8619.
Hence as mentioned in Opening comments, even if the Nifty stays above 8490 the path ahead may not be smooth as these areas near 8555 and 8619 are regions of rejection for the coming week at least.
If the spot continues to trade below 8490 in the week then all bullish bets are off and we will likely see rotation again upto 8354 -8305 to check for buyer resolve again.
Update 02/06
In a bearish flip today the supports at 8305 were broken on heavy volumes .
We now see levels of 8305- 8355 resisting upmove efforts and more likely to see failure and new selling.
Thus any bounce to 8354 is now a short for an initial target of 8140 followed by 8080 spot.
BankNifty Spot :
Last week we spoke about 18220 holding up as support and the index turned promptly for 18226 early in the week. However friday’s trade broke above the 18600 zone strongly and may have given the index the impetus to push a bit more higher in the coming week.
The chart above for the week shows a sideways developing value area and a close near the highs.
If the Profile continues Mon above Friday highs there is an immediate 200 points of upside to 18900 and possibly 19160 on a continuation. The spot closed at 18720 on friday.
This zone above 18900 spot is tricky in the BankNifty for shorts as the market has the potential to run through stops right upto 19250 this week. So we will not be looking for short trades above 18900 in the coming week and wait for the market to exhaust that part of the move or show aggressive selling at higher levels during the week.
However if 18900 is not crossed during the week for any reason shorts may attempt to come back in the index again.
We see support during the week at 18500- 18550 spot.
The second line of support is at 18360.
Update 02/06 :
In a fierce counter attack the sellers broke through both supports listed above at 18550 and 18360 sending the BNF crashing down by 880 points in a session.
At the close the BN had undone all the work from the 15th of May .
We feel bounces upto 18160 spot and 18300 previous support will be used to create new shorts in the index.
The path of the auction below the broken 18300 zone now points to a destination trade at 17420 in BN spot in the coming weeks.