Nifty maintains stability amid earning season kick-off, Bank Nifty eyes key levels for potential upside

Nifty maintains stability amid earning season kick-off, Bank Nifty eyes key levels for potential upsideBy Anand James

As we enter the earnings season, Nifty appears to have averted a large slide that it was poised to, at one point, providing for a soft landing for the decline, and allowing a sideways move, and a breathing space for bulls to regroup. While Nifty and Bank Nifty failed to reclaim their previous peaks, and even as some sectors found the going not so easy, it is instructive to note that several sectoral indices like consumer goods, power, PSE, realty, oil, fmcg, etc. moved to new record peaks.

In other words, the risk appetite never went away, even as Nifty and Bank Nifty’s struggles suggested a sense of caution.

Yet another striking feature of last week was how VIX fell from 15.5 levels to sub 13 levels, suggesting that volatility expectations have dwindled substantially. Towards this end, we will begin the week with an upside, but modest expectation, aiming 21860-930, with eyes on 22400 as well. Downside markers may be placed at 21630, but a collapse is less expected, unless below 21370.

The reason why we are a bit guarded in the upside expectations is because, 9 out of the last 10 years, which have included two election years, January’s second half has ended in the red. Traders will still have a lot to look forward to though, as earnings season will provide plenty of stock-specific moves.

Bank Nifty meanwhile is poised to enter the week evenly poised, after having recovered well from Friday’s lows. While we wait for a push above the 48130/48300 region in order to resume the 50000 move, favoured view sees less chance of a directional upside, with MACD histogram having fallen into the negative zone in daily charts, and the index is likely to see a struggle. The inability to clear the 48300 region should confirm the same, pushing the index into a consolidation zone of 47800-47000.

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