The market kicked off the last trading week on a positive note on Monday, which was then followed by yet another head start to test the 18,350 mark. However, traders turned nervous all of a sudden there, resulted in a decent profit booking below 18,100 on the same day. After this the global markets became jittery which triggered sustained selling thereafter. As the week progressed, Nifty went on to thrash all intermediate supports to eventually test sub-17,500 levels on the last session of the week. Fortunately, few banking heavyweights provided much needed helping hand there to pull the Nifty beyond 17,600 at the close.

Due to this week's sell off, Nifty finally snapped its four-week winning streak and is placed at a very interesting juncture now. Honestly speaking, although we were seeing 18,350 as a mild hurdle, we did not expect Nifty to come off at such velocity. In fact after breaching 18,100, we did anticipate further decline towards 17,800. But whatever happened in last couple of sessions to even test 17,500, has surprised unpleasantly to some extent. Now with reference to our intra-week commentary, we have been mentioning how 17,650 is important in a short term and the real damage of the recent upward trend would start below it. Today, we did slip below it but the way market recovered in last one hour, we need to revise our levels a bit. We generally do not do this, but it should be taken as an exception.

Taking a glance at the daily time frame chart, we can see Nifty retracing almost by 50 percent of the recent rally and saw some respite after nearing the '89-day EMA' (exponential moving average). Hence, for the coming week, 17,500 – 17,400 should be considered as crucial supports. Although the global picture is not good, we still would like to back our inclination towards some relief move. If any recovery has to happen there would not be better levels than this.

On the upside, first sign of strength would start above 17,800 and then we can reclaim the 18,000 terrain ahead of the budget itself. First couple of sessions would be important for market as it will set the tone ahead of the mega event. One should focus on Financial and Auto space because in case of a recovery, they are the ones to be the frontrunners.