Weekly Market Outlook for 8 May to 12 May

Our market rallied higher for most part of the week and surpassed the 18250 mark in Thursday’s session. However, the sell-off in HDFC twins dampened the overall sentiment and we witnessed a sharp selling on the last trading day which wiped out all the weekly gains.

Nifty Today:

Everything seemed well till Thursday’s session as the Nifty continued its rally after the uncertainty was over post FED meeting outcome. However, a jolt in HDFC twins led to a sell-off in the banking space which resulted in a sharp correction on Friday. Technically, the RSI readings had shown a negative divergence on the hourly charts as the new high in price on Thursday was not confirmed by a new high in RSI. The index was also trading in the previous swing high resistance range which was in range 18200-18260. Such situations usually result in a correction which started at the end of the week. Now the daily readings on Nifty are still positive indicating this to be a corrective phase within an uptrend. Also, the market has rallied sharply in last one month and such short term correction would relieve the overbought set-ups and form a base for the next rally. In the coming week, the volatility could continue to be higher and 18050-18000 will be the immediate support to watch out for. If this support range is breached, then it will be a hint of a probable pricewise correction upto the '20 DEMA’ which is placed around 17820. The readings on the Bank Nifty chart have given a negative crossover and thus there could be some deeper retracement in the banking index. The important support for this index is around 42350 which needs to be closely watched. Below this, the Bank Nifty index could approach its next support towards 41800. 

Sharp sell-off on Friday wipes out entire weeks gains

Short term traders should remain light on positions and watch out for next base formation. This correction should form a higher bottom on the positional charts and once such signs are seen, it would be prudent to enter longs again. Incase of price wise correction, 17820- 17700 would be the range to do some bottom fishing.

Nifty & Bank Nifty Levels: