Technical & Derivatives Report 24th February 2020: Angel Broking
By Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):
"We had a shaky start for the week as some overhang continued of what we saw previous Friday with respect to the AGR case. In addition to this, things related to coronavirus aggravated which had a rub off effect on all global peers. Thus, market looked nervous in first half of the week gone by to retest 11900 levels. Fortunately, bulls pounced on this opportunity quite aggressively and as a result, we witnessed a v-shaped recovery thereafter to reclaim the 12000 mark on a weekly closing basis.
We have already mentioned in our intra-week reports how crucial that recovery was on Tuesday. Let us see what these technical observations are. On Tuesday all major indices formed a 'Bullish Hammer' pattern on daily chart and for Nifty it was placed at the 50% retracement of the recent up move. Now we have moved one step forward as we can see the Tuesday's 'Hammer' pattern along with Monday's and Wednesday's candle, combinedly gives a birth to a 'Bullish Island Reversal' pattern. This configuration occurs when the previous gap is precisely filled by yet another gap but in the opposite direction and has extremely bullish implication. Hence, going forward, as long as we do not enter into Wednesday's gap area of 12042.10 - 12030.75, the said pattern remains intact and is likely to provide some impetus to the next leg of the rally. In the forthcoming week, once Nifty surpasses 12160, we may see Nifty retesting of 12220 - 12250 levels. On the downside, 12042 - 12000 remains a strong support zone.
The banking index has been slightly underperforming since few days but on Thursday we witnessed a sheer outperformance from this space courtesy to a smart move in SBI and Indusind Bank. Apart from this, the midcap space looked vibrant in last couple of days and has managed to give a v-shaped recovery. Hence, we may see good traction in this universe in coming days as well."