07-05-2022 09:37 AM | Source: ICICI Direct
Index is likely to open on a positive note amid firm global cues - ICICI Direct
News By Tags | #3961 #879

Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel

https://t.me/InvestmentGuruIndiacom

Download Telegram App before Joining the Channel

Nifty: 15835

Technical Outlook

• The index started the session on a subdued note wherein it retraced 50% of Friday’s sharp recovery. Fag end buying demand helped the index to resolve above Friday’s hammer like candle. The daily price action formed a bull candle carrying a higher highlow, indicating follow through strength

• The rejuvenation of upward momentum after witnessing slower pace of retracement and improving market breadth makes us believe the index would resolve higher and gradually head towards 16200 in coming weeks. Key point to highlight is that the Bank Nifty, which carries 35% weightage in the Nifty has resolved out of three week’s consolidation (33775-32300) and closed above its 20 days EMA for the first time since early June. We believe the revived upward momentum in banking stocks would drive the Nifty towards 16200 in coming weeks as it is confluence of:

• a) 61.8% retracement of June decline (16794-15183)

• b) upper band of negative gap recorded on June 13 (16201-15878)

• The move towards 16200 would be in a non linear manner owing to elevated global volatility. However, intermediate breather should be utilised as buying opportunity as we expect buy on dips strategy to continue to fare well. In the process, strong support for the Nifty is placed around June low of 15200

• The broader market indices mirroring the benchmark move, as both, Nifty midcap and small cap index are regaining upward momentum after witnessing slower pace of retracement. Over past 5 sessions both indices have retraced merely 38.2% of preceding 5 sessions up move, highlighting buying demand at elevated support base. In three instances over the past decade, intermediate correction in the Nifty Midcap, Small cap indices have been to the tune of 28% and 40%, respectively. At present, both indices have bounced after correcting 25% and 34%, respectively. Therefore, base formation from here on would set the stage for a technical pullback in coming weeks

• In the coming session, index is likely to open on a positive note tracking firm Asian cues. We expect, index to resolve higher and maintain a higher high-low formation. Hence, use intraday dip towards 15780-15812 for creating long position for the target of 15897

NSE Nifty Daily Candlestick Chart

 

Nifty Bank: 33940

Technical Outlook

• The daily price action formed a strong bull candle with a higher high -low as the index witnessed positive follow through to Fridays up move from near the support area of 33000 levels

• Going ahead, we expect the index to maintain positive bias and gradually head towards 34500 levels in the coming sessions as it is the higher band of bearish gap area of 13th June 2022 and the 61 . 8 % retracement of the decline of June 2022 (36083 -32290 ) .

• Dips towards the support area of 32600 -33000 levels being the 80 % retracement of the recent up move (32291 -34147 ) should be used as an incremental buying opportunity

• In a smaller time frame the index has already taken six sessions to retrace just 61 . 8 % of its preceding six sessions up move (32291 -34147 ) . A shallow retracement signals a higher base formation

• The index has key immediate support around 32100 levels as it is the almost identical lows March and June 2022 placed around 32155 levels

• Amongst momentum oscillators, weekly RSI has formed a positive divergence with June low reading of 38 against May 2022 reading of 37 while price made new low . Such divergence is indicating receding downward momentum and likely to trigger further technical pullback in coming weeks

In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to trade with positive bias while holding above 33700 levels . Hence after a positive opening use intraday dips towards 33810 -33890 for creating long position for the target of 34130 , maintain a stoploss at 33690

Nifty Bank Index – Weekly Candlestick Chart

 

To Read Complete Report & Disclaimer Click Here

 

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

 

Above views are of the author and not of the website kindly read disclaimer