Market erased weekly gains; courtesy to brutal knock in financials : Angel Broking
(Time Zone: Arizona, USA)
Weekly Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):
"Last Friday's weakness was carried over this Monday as well and hence, Nifty witnessed a decent corrective move on the opening day to test sub-14300 levels. However, the bulls were not ready to give up easily as they came back strong on the subsequent two sessions on the back of overall global optimism. In the process, almost all major sectoral indices registered their new record highs. Everything looked hunky dory until the sudden profit booking took place in the last hour of the weekly expiry. This sell off went on to intensify on the last day of the week to erase all weekly gains to conclude tad below the 14700 mark.
Early this week, the markets took a smart U-turn on a lot of positivity across the globe. Although, new highs were being hit, we were not convinced with the move, and we had clearly stated this in our intra-week commentary. The main reason behind this was indices (NIFTY, BANKNIFTY and NIFTY MIDCAP 50) making new highs with the 3-points Negative Divergence in the RSI-Smoothened oscillator on daily chart. Such divergence with 3 points is generally considered a sign of caution and hence, repeatedly we advised not getting carried away by the euphoria. Now, although Nifty has not broken any major supports, the development in BANKNIFTY does not look encouraging at all. In fact, the entire banking and financial space was the major culprit behind Friday's correction as they took a solid knock. To be specific, BANKNIFTY has confirmed a double top pattern on daily chart and has broken its important swing low with an ease. The weekly chart of the same exhibits a confirmation of 'Long Legged Doji' pattern. For Nifty, the important support to watch out would be 14222, below which the recent bullish structure will get distorted to extend the correction towards 14000 - 13800 levels. On the higher side, 14500 - 14632 would be seen as immediate hurdles.
Historically, it is rare to see a major trend reversal ahead of any mega event. Hence, it would be interesting to see how things pan out in the forthcoming week as the Union Budget is around the corner. Looking at the price development, it does not look encouraging. All eyes should be on the financial space; because if further weakness has to come, it would certainly be led by this space. We continue to advise staying light on positions and should ideally avoid creating leveraged positions ahead of the budget (especially in high bets counters). With a broader view, if any, significant correction comes, it would be a great opportunity to accumulate quality propositions in a staggered manner."