The Other Side of Budget 2020

NIFTY remained under pressure in the extended week amid volatility ahead of the Union Budget. For the entire week bears were at the upper hand over the bulls as the 50stock index made lower top lower bottom formation on the daily chart and post-budget weakness continued as it drifted below its psychological 11800 levels. It formed a big bearish candle on the daily chart and Now, the overall trend for Nifty continues to remain sideways to negative until it manages to reclaim its 12000 marks. We expect tepid start on Monday with negative bias. As long as it trades below 11800 levels we expect some consolidation in the range of 11500-11800 zone. However, it ended the extended session near its 200-DMA which is placed at 11650.

On the derivative front, Call writers were active in 11800,11900 and 12000 strikes where maximum OI concentration is placed at 12200 strikes, whereas maximum put base has shifted to 11500 strikes.

The sentiment indicator “INDIAVIX” which is near 17 levels is still a cause of concern for the bull and it has to cool down below 14 levels.

BANKNIFTY provided a breakdown from its head and shoulder formation and breached the neckline which was placed around 30650. Now the downside target is at 29200 levels whereas for the index to witness a relief rally it has to move and sustain above 30500 levels. It continued its negative momentum for the 3rd consecutive week. The weekly MACD is well in the sell mode along with negative divergence on RSI. The index Heavyweight i.e. ICICIBank, SBIN, HDFCBank, etc have also broken their crucial support levels and have come under the dominance of the bears. However, the view given is based on technical study.

The investor’s budget might take a hit because of the negative move in the index thus trading with caution and hedging strategies is recommended.

Author: Miss.Ayushi Sushil Bagri Equity Research (Investment Services), (Investment Services), 1st Feb 2020


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