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NSE (Nifty): 15778

Technical Outlook

* The Nifty witnessed follow through strength after Wednesday’s strong comeback from panic low of 15513. The daily price action formed a bull candle carrying higher high-low, indicating rejuvenation of upward momentum. In the process, broader market relatively outperformed the benchmark by gaining more than 0.8%, each

* The key point to highlight over past seven weeks is that, Nifty has managed to hold the lower band of consolidation 15500 on multiple occasions while absorbing host of unsettling events like Covid disruption, elevated global volatility and Q1FY22 earnings, highlighting inherent strength which makes us believe index would gradually head towards upper band of consolidation placed at 15950 in coming sessions

* Key thing to monitor from here on would be that, over past seven sessions the index has corrected (15962-15513). Thus a breach above upper band of consolidation 15950 in couple of sessions would lead to faster retracement, along with multi sector participation would confirm breakout from ongoing consolidation (15950-15500) and open the door for next leg of up move

* 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 undergoing breather after recent resilience. We believe, temporary breather 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, the higher base formation of 15500 would continue to act as a key support as it is confluence of:

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

* b) 10 weeks EMA placed at 15640 In the coming session, index is likely to open on a muted note tracking subdued Asian cues. However, we expect index to find support around intraday support of 15650 and stage a pullback. Hence use intraday dips towards 15695-15720 to create long for target of 15809.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34691

Technical Outlook

* The daily price action formed a high wave candle which remained contained inside previous session high -low range signalling base formation after last three session sharp decline . In the process the index maintained the rhythm of not correcting more than 3 - 4 consecutive sessions as seen since April 2021

* Going ahead, we expect the index to hold above the lower band of the last eight weeks consolidation range (34000 ) and gradually head towards the upper band of the range placed around 35800 levels . 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 34070 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 negative note amid soft Asian cues . However, we expect buying demand to emerge around 34500 levels(61 . 8 % retracement of last two session pullback) . Hence use intraday dips towards 34480 -34540 , for creating long position for target of 34770 , maintain a stoploss of 34360

Nifty Bank Index – Daily Candlestick Chart

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