Stay with outperformers including Bank Nifty, HDFC Bank & ICICI Bank: YES Securities


After a big rally, the market will always run into a hurdle and will face resistance. This is a normal phenomenon in a bull market. The same was put on display in Friday’s (September 27) session.

Nifty’s struggle around three-digit Gann number of 116(00) continued as it yet again turned lower after marking an intra-day peak of 11,594. In fact, in this week’s trade, the index has also failed to sustain above the peak of Red Tall Bar seen on July 19, 2019 (i.e. 11,640).

Failure to confirm a close above the same has caused a discontinuity in the recent pullback as volatility made a comeback.

A sharp fall in noon trades pulled markets into the negative territory, marking a low of 11,500. Nifty’s structural strength is intact. It is only the lack of momentum and current struggle to clear the 11,600 zone which has caused Friday’s frailty.

Multiple points of confluence came into play in this week’s trade as the Nifty defended 11,350-11,400 support zone. The same is marked around index’ second line of defence as per Gann rule of 8.

The midpoint of current three-digit Gann channel is placed at 11,350, four-digit Gann number is seen at 11,400 and presence of Lucas series number 11,373 (marked post the recent peak of 11,695) suggests a confluence of support at play around 11,350.

Previous week’s 5 percent+ recovery from week’s low of 10,670 has changed the overall structure of the market, hence intraday pull-back should be considered as buying opportunity.

Index biggies – Bank Nifty has been the prime reason for the recent turnaround.

With Nifty Private Bank index rallying by over 12 percent since previous week’s low (rallying from the support of its 2-year mean), Bank Nifty’s breakout from the structure of lower high and HDFC Bank and ICICI Bank’s strong outperformance, leadership sectors are lifting the markets higher again.

In such environments, retracements or corrections tend to be short-lived. So, riding with these outperformers appears to be the best bet.

(The author is Lead Technical Analyst – Institutional Equities at YES Securities.)

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