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Published on 29/07/2021 10:06:20 AM | Source: ICICI Direct

Nifty managed to hold the key support of 15500 on expected lines - ICICI Direct

Posted in Market Outlook| #Market Outlook #ICICI Direct

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NSE (Nifty): 15709

Technical Outlook

* Despite initial sharp sell-off, the Nifty managed to close on a flat note as it recouped most of intraday losses (recovered more than 200 points from day low), highlighting inherent strength. The daily price action formed a hammer like candle with small real body and long lower shadow, highlighting supportive efforts emerged at lower band of consolidation coincided with 50 days EMA placed around 15550. As a result, Nifty managed to hold the key support of 15500 on expected lines

* The elevated buying demand at key support threshold of 15500 highlights inherent strength that makes us believe, holding above Wednesday’s panic low (15513) would help index to gradually head towards upper band of consolidation placed at 15950 in coming week. In the process, bouts of volatility can not be ruled out. Hence, any dip from here on which should be capitalised on to accumulate quality stocks amid progression of Q1FY22 earning season

* Structurally, the index is undergoing a shallow retracement as over past seven weeks it has merely retraced 23% of preceding 8 weeks rally (14150-15900), highlighting robust price structure. We believe, ongoing healthy consolidation would pave the way for next leg of up move

* The broader market indices took a breather after recent resilience. We believe, temporary breather from hereon would help broader markets to cool off the overbought condition and form a higher base that would pave the way for next leg of up move

* Structurally, we expect ongoing corrective decline to get anchored around key support threshold of 15500, as it is confluence of:

* a) 80% retracement of June-July rally (15450-15962), at 15550

* b) 10 weeks EMA placed at 15630 In current scenario, index has already corrected over past 3 sessions. Thereby we expect Nifty to maintain the same rhythm by arresting ongoing correction in coming sessions. Meanwhile, volatility to remain high owing to monthly expiry. Hence use intraday dips towards 15680- 15710 to create long for target of 15797.

NSE Nifty Daily Candlestick Chart

 

Nifty Bank: 34532

Technical Outlook

* The daily price action formed a bear candle with a long lower shadow highlighting buying demand near the lower band of the last eight weeks range around 34000 levels

* Key observation is that the index since April 2021 has not corrected for more than three to four consecutive sessions, with three sessions of decline already behind us, we expect the index to maintain the rhythm and rebound in the coming couple of sessions

* Going ahead, we expect the index to continue with its last eight weeks consolidation in the broad range of 34000 -35800 . Lack of faster retracement in either direction signals continuation of the current consolidation .

* The index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 -35810 ) over past eight weeks highlighting strength and a higher base formation

* We advise to capitalize the current breather as an incremental buying opportunity in quality large and mid -cap banks as the overall structure remains positive

* The index has immediate support base at 34000 levels being the confluence of the following technical observations

* (a) The lower band of the last seven weeks’ consolidation range placed around 34000 levels

* (b) The rising 100 days EMA is also placed at 34040 levels

* Among the oscillators the daily stochastic has rebounded from the oversold territory and is in up trend thus supports the positive bias in the index

* In the coming session, index is likely to open on a flat to positive note amid firm Asian cues . Volatility to remain high on account of the monthly expiry . However, we expect index to maintain its rhythm of not correcting more than 3 - 4 consecutive session and trade with positive bias . Use intraday dips towards 34490 -34560 , for creating long position for target of 34790 , maintain a stoploss of 34370

Nifty Bank Index – Daily Candlestick Chart

 


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