Published on 10/06/2021 11:00:05 AM | Source: ICICI Direct

The Nifty started the session on a positive note and scaled to a fresh all time high of 15800 - ICICI Direct

Posted in Market Outlook| #Market Outlook #ICICI Direct

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NSE (Nifty): 15635

Technical Outlook

* The Nifty started the session on a positive note and scaled to a fresh all time high of 15800. However, profit booking from alltime high dragged index 230 points lower and closed below its previous sessions low after thirteen sessions, indicating breather in upward momentum. As a result, daily price action formed a bear candle with small lower shadow, indicating profit booking seen in recently ran up stocks as over past four weeks index rallied 8% that hauled weekly stochasstic oscillator in overbought condition (currently placed at 92).

* We believe, temporary breather from here on would make market healthy by cooling off the overbought conditions and gradually pave the way to head towards our earmarked target of 16100 in June 2021. However, move toward 16100 would not be linear as bouts of volatility owing to overbought condition cannot be ruled out. Therefore, buy on dips in quality large caps would be the prudent strategy to adopt at current juncture as we believe strong support is placed at 15200

* The formation of higher high-low on the larger degree chart backed by improving market breadth signifies robust price structure that augurs well for durability of ongoing up move. Our earmarked target of 16100 is based on: a) Price parity of post budget rally (13597-15432), projected from April low of 14151, at 16055 b) Past two months consolidation (15140-14150) breakout target at 16120

* In line with benchmark index, broader market indices undergone profit booking after recoding fresh all time-high. Over past four weeks, Nifty midcap and small cap indices have rallied ~12% that pulled weekly stochastic oscillator in overbought territory (placed around 90), indicating couple of days breather can not be ruled out

* Structurally, we believe the index has formed a strong base at 15200 levels which we do not expect to breach as it is confluence of: a) 61.8% retracement of past three week’s rally (14885-15800), at 15235 b) past two week’s low is placed at 15145 In the expiry induced volatile session, we expect stock specific action to prevail amid positive bias. Hence, use intraday dip towards 15600- 15625 to create long for target of 15713

NSE Nifty Daily Candlestick Chart


Nifty Bank: 35085

Technical Outlook

The daily price action formed a bear candle with a lower high - low signalling profit booking for a second consecutive session after a sharp up move of more than 11 % in last three weeks .

* Key observation is that the index has maintained the rhythm of not correcting more than three sessions since April 2021 . In the current scenario the index has already corrected for two consecutive sessions . We expect the index to maintain the same rhythm and buying demand to emerge above the support area of 34400 -34000 in the coming couple of sessions

* We believe the current breather after sharp 11 % up move in just three weeks should not be seen as negative instead it should be capitalised to accumulate quality banking stocks for the next up move towards 36200 in the coming weeks as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708 -30405 ) and the price parity with previous up move (30405 -34287 ) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* The crucial support for the index is placed at 34400 -34000 levels as it is confluence of the

* (a) 38 . 2 % retracement of the current up move (32115 -35810 ) placed at 34400

* (b) the recent breakout area and the April high (34287 )

* (c) The rising 50 days EMA placed at 33960 levels

* In the coming session, the index is likely to open on a flat to positive note amid mixed global cues . We expect the index to consolidate with positive bias after last two sessions profit booking . Volatility is likely to be high on account of the weekly expiry . Use dips towards 34770 -34830 for creating long position for the target of 35040 , maintain a stoploss of 34640

* Among the oscillators the daily stochastic remain in downtrend, however it is approaching oversold territory . Hence buying demand d is expected around the crucial support area of 34400 - 34000 in the coming sessions

Nifty Bank Index – Weekly Candlestick Chart


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