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Dips = Buying opportunity

Technical Outlook

* The index continued its record setting spree over third consecutive week as Nifty clocked a fresh all time high of 15835. The weekly price action formed a bull candle with small lower shadow, highlighting elevated buying demand as intra-week dips were bought into.

* Going ahead, we expect index to extend its northbound journey and gradually head towards our earmarked target of 16100 in June 2021. Our constructive view is backed by following thesis: a) The formation of higher high supported by improving market breadth highlights robust price structure. Currently 94% components of Nifty 500 index are trading above their 50 days EMA compared to May reading of 86%, indicating broader market participation, b) Strong global cues have been providing impetus as majority of global indices continue to exhibit strength and hit lifetime highs. Domestic market is witnessing strong positive correlation with its global peers

* We believe a move toward 16100 would be in a zig zag manner as bouts of volatility owing to overbought condition of weekly stochastic oscillator (currently placed at 97) can not be ruled out. Therefore, any dip from here on should be capitalised on as incremental buying opportunity in quality large cap and midcaps

* Sectorally, IT, Infra and Consumption are expected to lead while BFSI and Auto offers favourable risk-reward setup

* On the stock front, we remain constructive on TCS, Tata Motors, SBI, Ashok Leyland, Sail, Titan, Cipla while, in midcaps we like DCB Bank, Glenmark Pharma, Mindtree, Intellect Design, Mahindra Logistics, Godrej Properties, Greaves Cotton, SKF India

* On expected lines, small cap index scaled to fresh all time high supported by faster retracement as nine quarters decline retraced in just five quarters, indicating structural improvement that augurs well for durability of ongoing up move

* Structurally, the formation of higher high-low highlights elevated buying demand that makes us confident to revise support base at 15400 as it is confluence of: a) As per change of polarity concept, earlier resistance of 15400 would now act as a key support b) 61.8% retracement of past three week’s rally (15145-15835), at 15409

* Structurally, the formation of higher high-low highlights elevated buying demand that makes us confident to revise support base at 15400 as it is confluence of: a) As per change of polarity concept, earlier resistance of 15400 would now act as a key support b) 61.8% retracement of past three week’s rally (15145-15835), at 15409

* In the coming session, index is likely to open on a soft note tracking mixed global cues. We expect Nifty futures to recoup initial losses and trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip towards 15720-15745 to create long for target of 15833

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35047

Technical Outlook

* The weekly price action formed a small bear candle with a lower shadow highlighting a breather after recent sharp up move of more than 11 % in just three weeks .

* Goining ahead, we believe the current breather should be used as an buying opportunity for up move towards our target of 36200 in June 2021 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

* In a smaller time frame the index has witnessed a shallow retracement as it has already taken eight sessions to retrace just 38 . 2 % of its preceding eight sessions up move (33274 - 35714 ) . A shallow retracement highlights a robust price structure and a higher base formation

* We do not foresee the index breaching the crucial support area of 34400 -34000 as it is confluence of the following technical observations :

* (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 34005 levels

* (d) The value of the rising demand line joining lows of April 2021 and May 2021 is placed around 34400

* In the coming session, the index is likely to open on a flat to negative note amid muted global cues . We expect the index to consolidate while holding above 34800 levels . Volatility is likely to remain high . Use dips towards 34870 -34930 for creating long position for the target of 35160 , maintain a stoploss of 34760

Nifty Bank Index – Weekly Candlestick Chart

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