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Nifty

Technical Outlook

• The Nifty started the weekly expiry session on a negative note on the back of the Fed rate hike. However, supportive efforts from intermediate support of 17500 helped the index to recoup intraday losses only partially as weakness in rupee against US dollar weighed on sentiments, restricting the recovery. As a result, the daily price action formed a high wave candle carrying small real body with shadows on either side, indicating elevated volatility. Continuance of lower high-low indicates a corrective bias. In the process, Nifty midcap, small cap relatively outperformed by gaining over 0.5% each

• Going ahead, we expect prolonging of consolidation in broader range of 18000-17300 ahead of RBI policy and monthly expiry. Rupee movement will also be key monitorable, which could lead to sectoral churn as defensives are attractively priced while rate sensitives may be vulnerable to temporary profit booking after sharp rally recently

• Key point to highlight is that, over past five weeks index has retraced merely 38.2% of preceding five weeks rally (15850-18100) absorbing global volatility, signifying inherent strength and relative outperformance against global peers. We believe, the shallow retracement has helped index to cool off the overbought conditions and ongoing higher base formation would pave way for next up move towards January 2022 high of 18300 by October 2022. Thus, extended breather should not be construed as negative instead dips should be capitalised on to accumulate quality stocks as key support exists around 17300

• The broader market indices are mirroring the benchmark move as both Nifty midcap and small cap indices are forming a higher base after resolving out of 8 months falling channel. The current broader market outperformance is supported by improving inherent strength. As currently 56% stocks of Nifty 500 universe have recorded Golden Cross where 50 days EMA has surpassed above its 200 days EMA, that augurs well for durability of up move going ahead

• Structurally, strong support for the Nifty is placed at 17300 which we do not expect to breach as it is 80% retracement of recent 11 sessions rally (17166-18096) coincided with 50 days EMA placed at 17352

• In the coming session, index is likely to witness a negative opening tracking weak global cues. Formation of lower high- lower low signifies corrective bias. Hence, use intraday pullback towards 17635- 17662 for creating short position for the target of 17551

Nifty Bank

Technical Outlook

• The daily price action formed a bear candle with a lower high -low signaling continuation of the consolidation for the sixth consecutive sessions after the recent strong up move .

• Going ahead we expect the index to continue with its last six sessions consolidation and form a higher base after the recent strong up move . we believe dips on account of global volatility should not be construed as negative rather should be used as a buying opportunity for up move towards 41800 levels . Index has strong support around 40000 -39800 levels

• In the weekly time frame after a strong rally of 29 % in just 13 weeks, index has approached overbought territory with a weekly stochastic reading of 79 . Hence, temporary breather cannot be ruled out after the recent strong outperformance which will make the overall trend healthier

• Structurally , the index has witnessed a faster retracement as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting overall positive bias .

• The index has strong support around 39800 levels as it is the confluence of the 20 days EMA (currently placed at 39860 ) which has acted as strong support in the entire up move of the last two months and the 50 % retracement of the last three weeks up move (37944 -41840 ) In the coming session index is likely to open on a negative note amid weak global cues . We expect the index to continue with its corrective consolidation . Hence after a negative opening use intraday pull back towards 40720 -40800 for creating short position for the target of 40470 , maintain a stoploss at 40910

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