Will Bulls Take Charge? Key Levels to Watch This Week

StockEdge's Morning Market Analysis - 6th Jan

The Nifty lost 183 points on friday to close at 24004. Last week, both the Bulls and Bears had a fair chance to play out. The bulls came into action on Thursday, where we saw a trending move, where the averages were taken out with ease, and closing was good. Auto was the top gainer last week, gaining around 5%. This has been a strong underperformed, and it was good to see the comeback from this index. The dollar index continues to trade near 109 levels. US indices trade near the support, and an attempt to rebound from these support levels was made on Friday. The market breadth on Friday was neutral.

Technically, the index tested the support of 23500 and confirmed a turnaround. Thursday’s move was encouraging, and the moving averages barrier was crossed with ease. On Friday, instead of a follow-up buying, the prices have again retraced, and Nifty is stuck between its averages. Yes, the underlying chart setup is gradually turning in favour of bulls. There are multiple reasons and technical evidence for 23500- 23300 to be the support zone, and now that we see a bounce from these levels, we would like to believe that the bulls are making an attempt. In hindsight, 24200 remains an an extremely crucial resistance level. Once this is cleared on a closing basis, we can be ready for higher levels. Considering the onset of January, where history is marked with trending moves and the Q3 earnings to start pouring in, bulls could have an edge - but sticking to quality is crucial. The 23850 - 900 area is the immediate support.

The bears will have an edge only and only on a close below 23500.

Coming to sectors - The auto index has given some reversal signs, and a follow-up buying will confirm the same, and we could see the momentum back. Bank Nifty was underperformed last week. It trades near support. 50500 remains an important support level for Bank Nifty. For the Nifty index to perform, banks have a crucial role to play.

To conclude - the Index needs to close above 24200 for the bullish momentum to kick in. However, gradually, the base is building for the same.

Nifty

Support 24900, 23850

Resistance 24200, 24230

Bank Nifty

Support 50900, 50600

Resistance 51100, 51400