Weekly Market Outlook for 20 Feb to 24 Feb

During the week gone by, Nifty rallied from the low of around 17700 and gave a breakout above its key hurdle of 17850-18000. However, it retraced some of the gain in the last trading session and ended the week above 17900 with weekly gains of about half a percent.

Nifty Today:

Post the Budget week volatility, Nifty recovered gradually and was witnessing resistance around the falling trendline resistance at 17950-18000. This also coincided with the Budget-day high and the same was broken ahead of the weekly expiry day. The upmove was majorly on the back of short covering by the FIIs as they trimmed some of their short positions and their ‘Long Short Ratio’ increased from 17 percent to 25 percent. The correction in the last trading session seems to be a pullback move which we usually see post a breakout. The momentum readings on the Nifty daily charts are still in ‘Buy Mode’ and until this structure negates, one should look for buying opportunities in this dip. However, the Banking index relatively underperformed the benchmark during the week and it has not yet confirmed a breakout above its Budget day high. The immediate support for Nifty is placed in the range of 17900-17850. If the index manages to hold this and resumes the upward momentum, then we could see a rally towards 18200-18250 in the near term. On the other hand, if the index weakens and breaks the 17800 mark, then this breakout has to be considered as a false breakout which would be a bearish sign. Traders should keep a close tab on these levels and position their trades accordingly.

Nifty witnessed breakout led by heavyweights, but banking index yet to confirm

Amongst the sectoral indices, the BankNifty did not provide a confirmation of breakout yet and is showing weakness. Certain stocks form the Oil & gas sector good price volume action and such stocks could see a positive momentum in the coming week.

Nifty & Bank Nifty Levels: