Published on 16/09/2020 10:43:57 AM | Source: ICICI Direct

The daily price action formed an inside bar as throughout the session index - ICICI Direct

Posted in Market Outlook| #Market Outlook #ICICI Direct

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NSE (Nifty): 11522

Technical Outlook

* Equity benchmarks recouped some of last session’s losses as the Nifty rose 82 points or 0.7% to end Tuesday’s session at 11522. The market breadth remained positive with A/D ratio of 1.5:1 as Nifty Midcap, Small cap surged 1%, 1.5%, respectively. Sectorally, financials and pharma outshone while FMCG and metal took a breather.

* The daily price action formed an inside bar as throughout the session index oscillated within Monday’s price range and managed to hold Monday’s low (11384). Lack of follow through to Monday’s corrective move signifies inherent strength. In the process, stock specific activity continued as broader market relatively outperformed the benchmark

* Going ahead, we believe sustainability above upper band of consolidation (11550), supported by across sector participation would help index to extend ongoing pullback towards 11800 in coming weeks. Else there would be prolonged consolidation (11550-11100) amid stock specific action

* Key monitorable is that, across sector participation especially in banking stocks (since constituents of Bank Nifty carry 33% weightage in the benchmark Nifty) would help the Nifty to resolve higher. Currently the Bank Nifty is poised at key support threshold of past three months rising trend line at 22200, and daily stochastic oscillator has also bounced from extreme oversold territory (currently placed at 34), indicating impending pullback. Meanwhile, IT and pharma sector have been on strong footing throughout ongoing consolidation. Thus, further traction in Bank Nifty would help Nifty to extend ongoing pullback

* On the broader market front, Nifty small cap index witnessed a faster pace of retracement as retraced preceding nine sessions decline (5927-5475) in just three sessions, indicating robust price structure that bodes well for next leg of up move. Thus, any breather from here on should be capitalised on to accumulate quality midcap and small caps

* We believe the Nifty has strong support at 11100. Hence, extended breather would get anchored around key support threshold of 11100 as it is confluence of a) 80% retracement of August rally (10882-11794) at 11064 b) identical weekly lows of mid-August at 11111 c) 50 days EMA is placed at 11148

* In the coming session, we expect index to trade with a positive bias and maintain a higher low formation while sustaining above Tuesday’s low of 11442. Hence, intraday dip towards 11480-11502 should be used to create long position for target of 11588


NSE Nifty Daily Candlestick Chart


Bank Nifty: 22466

Technical Outlook

* The Bank Nifty settled higher on Tuesday helped by buying demand in private sector banks . The Bank Nifty ended the session at 22466 , up 1 .65 % or 364 points 

* The daily price action formed a bull candle as buying demand emerged at key support threshold of 22000 for third time in past five sessions as prices approached oversold territory (stochastic reading of 25 ) . Index however traded within past five session range (22000 -22750 ) indicating base formation near key support

* Key point to highlight is that since May lows (17105), the index has not extended intermediate corrective phase for more than nine consecutive sessions . In current scenario, Bank Nifty index has taken a breather after nine consecutive sessions decline (25233 -22080 ) indicating impending pullback in the coming week

* The index has already taken 12 sessions to retrace 80 % of the preceding nine sessions up move (21403 -25232 ) . Lack of faster retracement on either sides indicate consolidation in the coming weeks in the broad range of 22000 -23600 levels .

* The Bank Nifty has key support around 22000 -21900 levels as it is the confluence of the rising demand line support joining the lows of June (19507 ) and August (21032 ) placed around 22100 levels and 80 % retracement of the last month major rally (21032 -25232 ) placed at 21900 levels . We expect the index to hold above the same on a closing basis

* Key hurdle is placed at 23600 which is 50 % retracement of past two week decline (25232 -22000 )

* In the coming session, index is opening on a flat note on back of muted global cues . Index is seen forming a base around the support area of 22000 -22200 . Hence, use dips towards 22450 -22510 for creating long position for the target of 22740 with a stoploss of 22340

* Weekly stochastic hovering near the neutral reading of 40 signals continuation of consolidation in the coming sessions


Bank Nifty Index – Weekly Candlestick Chart


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