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Nifty:17380

Technical Outlook

* The Nifty began Tuesday on a strong note to register a new intraday high of 17438 although profit booking in the second half led it to close below 17400 as stock specific action picked up. The index formed a higher high-low after five days breather. A follow through in the coming session would lead it to resume its upward trajectory else consolidation amid stock specific action would continue. After a sharp 12% rally in just five weeks, that led daily and weekly stochastics in overbought trajectory (readings beyond 90), we do not expect a runway rally but a positive consolidation in coming week. Outperformance of broader market indices is likely to continue in the near term

* We expect markets to remain stock specific, with the Nifty undergoing a healthy consolidation. Hence, it would be prudent to stick to buy on decline strategy to accumulate quality stocks as over past 15 months such strategy has worked well for investors. As we do not expect the Nifty to breach 16900 in consolidation phase, dips towards psychological level of 17000 would offer incremental buying opportunity in coming week

* Structurally, our broader positive stance is intact with the Nifty gradually heading to 17600 in September 2021 as it is the price parity of July-August rally (15515-16700), projected from midAugust low of 16376. Sectoral churn amid consolidation would make overall strength healthy, going ahead

* On expected lines, broader market indices have regained upward momentum and hit a new lifetime high confirming broader structural uptrend. We expect stock specific action to continue and broader indices to relatively outperform the Nifty in the coming week. Structurally, the formation of higher high and low, signifies continuance of positive bias, which makes us confident to revise support base upward at 16900, as it is 50% retracement of current up move (16376 -17436)

* In the coming session, index is likely to open on a flat to positive note amid muted Asian cues. We expect the index to continue with its last five sessions consolidation while holding above 17350. Hence, use intraday dips towards 17350-17385 for creating long position for target of 17467

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 36613

Technical Outlook

* The daily price action formed a high wave candle with a higher high -low signaling continuation of the consolidation for the seventh consecutive session after the recent sharp up move of more than 2000 points

* Going ahead, we expect the index to continue its recent healthy consolidation in the current week, thus forming a higher base above the upper band of the recent range breakout area (36200 ) .

* Our broader positive stance is intact with bank Nifty gradually heading towards 37700 levels in September 2021 as it is the confluence of the measuring implication of the recent range breakout (36300 -34800 ) and the previous all -time high of February 2021

* The index has already taken seven sessions to retrace just 38 . 2 % of its previous eight sessions up move (34818 -37140 ) . A shallow retracement signals a positive price structure and a higher base formation

* Buying on declines strategy has worked well over past 15 months . Hence, any breather in the coming week would offer incremental buying opportunity in quality banking stocks

* The index is seen forming higher high -low in the larger degree chart, which gives up confident to revise the support base higher towards | 35300 -35500 levels as it is the confluence of the following technical observations :

* 80 % retracement of the current up move (34817 -37140 ) placed around 35300 levels

* the value of the rising trend line joining the previous lows is also placed around 35480 levels

* The daily stochastic is seen forming a base near the neutral reading of 50 , thus supports the positive bias in the index .

* In the coming session, index is likely to open on a flat to positive note amid muted Asian cues . We expect the index to continue with its last seven sessions consolidation while holding above Monday’s low (36412 ) . Hence, use intraday dips towards 36530 -36590 for creating long position for target of 36830 , maintain a stoploss of 36410

Nifty Bank Index – Daily Candlestick Chart

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