Continuing from what we wrote on Friday, the drop looks a bit deeper. In the entire rally from 15900 to 17950, all the pullbacks were small and shallow. In fact we did not break 20EMA and now it will be the most important level for the week. The nearer we are to the MA, the better is the Risk Reward. 20 EMA stands at 17330. The overall structure has turned bearish not only for the Index but many large cap stocks are showing divergence.
These corrections are a welcome phenomenon in the markets. It brings in new traders/investors and this change of hands is the concept behind higher higher and higher low formation. There are many gaps in the rally upside and the markets will come down to fill them in future.
Hence, all buying and selling will be highly stock specific.
Nifty. Support is placed at 17600 and resistance at 17880. This should be the range today.
BankNifty. Support is placed at 38200 and resistance at 38900.
Derivative. Data is highly bearish on futures but more so on options. We have 1.6 lacs net put long contracts which indicate immediate bearishness.
Check our Bank Nifty tips for today and make money on a daily basis.