Key points for the week India Markets, NIFTY, BANKNIFTY, NIFTYMIDCAP
· As expected, the market tested high drifted sideways for most of the week
· Market tested high of the supply zone 11600-11700 supply and posted higher high at 11714
· NIFTY is showing a bullish flag, but given the October monthly options expiry on Thursday, we may have to wait for the bullish breakout that could happen next week.
#NIFTY, which had entered the Supply Zone (horizontal rectangular area from 11627 to 11700) in earlier week, moved further to completely penetrate the SZ. However, as expected, it consolidated in a narrowing range, slightly moving sideways. By end of the week we find a bullish flag formation in NIFTY.The long bottoming tails in each day’s trading suggest that bulls are in control.
Though the market traded higher above the bullish flag, we are not taking it as a sign of a clear breakout because it happened on Muhurat Trading day (on Diwali day, 27th October). Besides, as the Max Pain point is between 11600 and 11700, we do not expect the market to return to these limits even if it occasionally trades outside the range.
Like NIFTY, the other key indices such as #BANKNIFTY and leading sectorial indices as well were trading sideways. BANKNIFTY and #NIFTYMIDCAP, as mentioned in last week’s bulletin, appear significantly weaker than NIFTY.
However, if NIFTY starts trading below 11500, it would be clear sign of failure of bull flag. In that case the market will look to retest 10700 level. In that case, the above mentioned weaker indices will lead the bear run.
There is nothing much to forecast in this market, as we expect sideways movement for now. This will continue until 31st October, when the current month options will expire. Even though the market has shown bullish flag formation, the thrust to the upside will not come before 31st. In the event the bull flag fails and NIFTY starts trading below 11500, it may lead to a bearish breakdown to retest 10700 level.