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Nifty to challenge lifetime highs of 18887…

Technical Outlook

• In line with our view, index resolved higher and approached near earmarked target of 18887 consequently buy on dips strategy fared well. As a result, weekly price action formed a bull candle carrying higher highlow, indicating continuance of positive bias. In the process, broader market endured its relative outperformance supported by across sector participation

• Going ahead, we expect Nifty to challenge lifetime highs of 18887 and gradually head towards 19300 in the month of July. In the process, we do not expect index to breach the key support of 18400. Thus, any dip from hereon should not be construed as negative instead capitalised it to build a portfolio by accumulating quality stocks from medium term perspective.

• We expect, broader market to endure its relative outperformance as Nifty midcap index continued with its record setting spree over fourth consecutive week while small cap index is still 11% away from its all time high. Key point to highlight is that, over past 12 weeks Nifty midcap and small cap indices have rallied >20% leading to overbought condition. However, there is no signs of weakness yet as the broader structure remains robust. Thus, any profit booking from higher levels should not be construed as negative instead it should be used to accumulate quality stocks that would pave the way for subsequent 25% rally in Midcap index over next 12 months

• On the sectoral front, the Pharma index has logged resolute breakout from 20 months falling channel, indicating conclusion of corrective bias in turn suggesting resumption of primary up trend. Further, the ratio line of Nifty Pharma / Nifty has bounced after forming double bottom at 15 years support trend line, indicating pick up in relative outperformance. Similar pattern was observed during 2020 that resulted into structural up trend in pharma space. At current juncture, we expect the pharma index to maintain the same rhythm.

• Sectorally, we expect BFSI, auto, oil & gas, capital goods to lead the rally while pharma, metal would regain upward momentum.

• On stock front, in large cap we prefer Reliance Ind, Axis Bank, Bajaj Finance, Tata Steel, Titan, Maruti, Tata Consumer, BEL while in midcap Ashok leyland, Minda Corp, Oberoi Reality, Bhel, M&M Finance, Graphite India, Deepak Nitrate, Shalby, PNC Infra, Ajanata pharma remain in focus

• Structurally, formation of higher high-low on the weekly and monthly chart signifies elevated buying demand that makes us confident to retain support base at 18400 as it is: a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature 18465 b) 50% retracement of current up move (18060-18864) c) current month’s low of 18464

• In the coming session, the index is likely to open on a flat note tracking muted global cues. We expect, index to trade with a positive bias and gradually challenge the Lifetime high of 18887. Hence, use intraday dip in June future towards 18840-18872 to create intraday long positions for target of 18957 with a stoploss of 18804

Nifty Bank: 43938

Technical Outlook

• The weekly price action formed a high wave candle as supportive efforts from lower band of past five weeks consolidation (43400 ) helped inde x to recoup intra -week losses, indicating prolonged consolidation that has helped to cool off the overbought conditions formed due to past 11 week rally measuring 15 %

• We believe, past five weeks consolidation 44500 -43400 has helped index form a higher base above 50 days EMA . We expect, index to gradually resolve above the upper band of consolidation placed at 44500 and eventually head towards 45500 as it is confluence of :

• A) implicated target of ongoing consolidation 44500 -43400

• B) 123 . 6 % external retracement of Dec -Mar decline 44151 - 38613 is placed at 45458

• Structurally, Bank Nifty has formed a higher base after witnessing a faster retracement wherein it retraced past 14 weeks decline (44151 -38613 ) seen during Dec22 -Mar23 in just seven weeks . Faster retracement in just half the time interval indicates structural improvement from medium term perspective . However after such sharp rally consolidation near life highs has made larger trend healthier

• On the downside, 43400 would continue to act as key support as it is confluence of the last four weeks identical lows and the 50 % retracement of the recent up move (42582 -44498 )

• In the coming session, the index is likely to open on a flat note amid muted global cues . We expect, index to trade with a positive bias while sustaining above 20 days EMA . Hence, create long position in the range of 43890 -43952 for the target of 44212 , maintain stoploss at 43774

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