01-01-1970 12:00 AM | Source: ICICI Direct
The weekly price action resulted in a small bear candle with a long upper shadow - ICICI Direct
News By Tags | #3961 #879

Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel

https://t.me/InvestmentGuruIndiacom

Download Telegram App before Joining the Channel

NSE

Technical Outlook

* The Nifty undergone profit booking after approaching in the vicinity of our earmarked target of 15500 amid overbought condition of weekly stochastic oscillator (currently placed at 87). As a result, index formed a bear candle engulfing last week’s bull candle, indicating healthy retracement of sharp rally of 13% post Budget. In the process, broader market endured its relative outperformance wherein Nifty midcap index scaled a fresh all-time high.

* Going ahead, we expect the index to extend the ongoing healthy retracement towards strong support of 14600 in coming weeks. Key point to highlight since May 2020 is that, the intermediate correction has not lasted for more than a week. Empirically, secondary corrections have been integral part of the major bull trend. Therefore, we believe, ongoing breather would help stochastic oscillator to cool off the overbought condition further and undergo a base formation at key support threshold of 14600. Hence, buy on dips in quality large cap would be the prudent strategy to adopt. Meanwhile, upside will be capped at 15300 as it is the 80% retracement of ongoing decline (15432-14898), at 15325

* On the sectoral front, IT, FMCG, pharma would relatively outperform. We remain constructive on quality stocks like Infosys, Marico, Laurus Lab, Container Corporation, Trent

* Structurally, we expect ongoing extended breather to find its feet around 14600 as it is 50% retracement of post Budget rally (13662-15432), at 14545 coinciding with budget week low of 13662

* In the coming session, Nifty future is likely to open on a flat note tracking mixed global cues. We expect index to extend the ongoing breather amid stock specific as intraday pullback would remain short lived. Hence, use intraday pullback towards 15045- 15068 to create short position for target of 14956.

NSE Nifty Daily Candlestick Chart

 

 

Bank Nifty: 35841

Technical Outlook

* The weekly price action resulted in a small bear candle with a long upper shadow signalling a breather after a stupendous rally of 27 % in the preceding 13 sessions .

* Going ahead, we expect the index to extend the current corrective decline towards the major support area of 34500 . While on the higher side 37000 levels is likely to act as immediate hurdle being the 61 . 8 % retracement of the current breather (37708 -35585 )

* We believe the ongoing breather after a sharp post Budget rally of 27 % would help the index cool off the extreme overbought conditions of weekly stochastic oscillator (currently at 85 ) and form a higher base .

* The overall structure in the index remain positive as forming higher peak and trough in the long term chart . Empirically, secondary corrections have been integral part of the major bull trend . Hence, we believe buy on dips in quality banking stocks would be the prudent strategy to adopt going forward

* The current breather is expected to get anchored around key support threshold of 34500 -34600 , as it is confluence of the following :a) The 38 . 2 % retracement of the entire previous rally (29687 - 37708 ) placed at 34640 b) The previous major trendline resistance is likely to reverse its role and act as support is currently placed around 34500 levels as can be seen in the adjacent chart

* In the coming session, the index is likely to open on a flat note tracking muted global cues . We expect the index in intraday to trade with corrective bias . Hence after a flat opening, we recommend to utilize intra day pullback towards 35970 -36030 for creating intraday short positions in Bank Nifty February Futures for target of 35740 meanwhile stop loss is placed at 36130

Bank Nifty Index – Daily Candlestick Chart

 


To Read Complete Report & Disclaimer Click Here

 

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

 

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer