Bank Nifty could top 45,400, Nifty targets 19,400; current levels may warrant some consolidation

Bank Nifty could top 45,400, Nifty targets 19,400; current levels may warrant some consolidation

By Anand James

Given the extremely tight trading ranges, for an extended period, we had maintained through the last fortnight that Bank Nifty would set the stage for broad market moves. Lastly, we had a U-turn from our severe bearish expectations for Bank Nifty, and reserved such bias until 50 DMA was broken, as it kept defending multiple attempts to roll down. Incidentally, it stayed put, and unleashed a massive leap higher that not only broke away from the trading range prevailing since May, but also convincingly moved past the previous record peak. And with it the broad market sentiments decidedly shifted to being bullish, with surging past 19,000 as well. This turn of events, encourages us to expect continuation in momentum, that could see another 1,000 point leap, taking us towards 45,400. Alternatively, expect upside bias to weaken, if unable to hold above 44,700.

Nifty rollovers also were high at 76.06%. Meanwhile, 14D RSI is at 66 for NSE Nifty 50, while it is above 71 for both mid and small caps, suggesting that, while near overbought levels, they do have headroom for more upsides. The break away and runaway gaps that we have seen in the last week, however, warrant some consolidation, but an outright reversal is less expected. However, expect ranges to ease, given VIX at just 11, but we may head to 19,300-400 initially, before any drama. Downside risk levels may be placed at 19,100 or 18,980.

USDINR meanwhile has had an uncharacteristically quiet week. This is bound to change. We will keep pinning for 82.1 for 81.9 as the breakout range for the time being, with 82.6-81.5 as the breakout objectives on either side.

(Anand James,Chief Market Strategist at Geojit Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)