Shrikant Chouhan, Head Equity Research, Kotak Securities
Benchmark indices recovered from intraday lows. Nifty closed 122 points higher, while Sensex was up 443 points. Among sectors, the financial services index outperformed and gained 1.63 per cent, while profit booking was witnessed in the oil & gas sector, pulling the oil & gas index down 1.11 per cent.
Technically, after an early intraday sell-off in the morning, the market found support near 24,900/81500 and bounced back sharply. From the lowest point of the day, the market recovered over 200/700 points. A reversal intraday formation and a bullish candle near the 50-day SMA (simple moving average) indicate that a pullback formation is likely to continue in the near future.
For traders, 25,000/82000 and 24,950/81800 will act as key support areas. As long as the market is trading above 24,900/81500, the pullback formation is likely to continue. On the upside, this bounce could extend to the 25255/82800 or 20-day SMA at 25,300/83000. The uptrend could continue further, taking the market to 25,375/83000. On the other hand, a drop below 24,950/8180 would weaken the uptrend.
For Bank Nifty, 56700/56600 would act as a key support zone, while the 20-day SMA at 56,900 or 57200 could act as a crucial resistance zone for the bulls. Below 56,600, it can fall to 56,500-56,300, while above 56,900, it can go up to 57,100-57,200.
For the day, buy between 25100-25050 with a stop loss at 24950 on a closing basis. The move past 25100 should increase the momentum towards 25255 and later 25300. A close below 24950 could be negative in the short term as the Nifty may fall to 24800 or 24700 levels.