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Nifty : 17754

Technical Outlook

• The Nifty started the session on a subdued note. Subsequently, profit booking around immediate hurdle of 17800 dragged index towards 200 days EMA. The daily price action formed a bear candle engulfing past two sessions real body, indicating breather after three consecutive sessions up move (17306-17800)

• Going ahead, we expect index to consolidate in the 17200-17800 for few sessions and for meaningful rally index needs to sustain above 17800 mark. Structurally, we maintain our positive stance and expect Nifty to head towards 18300 in March as it is 61.8% retracement of past three months decline (18887-17255). Historically, over past two decades, on all ten occasions when Nifty corrected for three consecutive months, in subsequent month, index gained average 6% from lows. Thus, any dips from hereon should not be construed as negative instead dips should be capitalized to accumulate quality stocks. Our structural positive stance is further validated by following observations:

• A) Historically, over past two decades, on all ten occasions when Nifty corrected for three consecutive months, in subsequent month, index gained average 6% from lows. Odds favour market to follow this rhythm and eventually head towards 18300 in March

• B) Indian benchmarks are undergoing higher base formation over past three months after reversing CY22 decline of 18%. Within a structural bull market, secondary correction is a part of the secular bull market. Current scenario is very similar to that of CY13, CY16 and CY18. In each of these identical instances, higher base formation consumed around three to four months and retraced preceding up move by around 50- 60%, followed by new highs over next quarter

• C) Despite host of negative news, India VIX (that gauge the market sentiments) has corrected 9% in the month of March, highlighting low risk perception among market participants

• D) Rupee has seen sharp appreciation last week as DOLLAR/RUPEE pair has reacted from key hurdle of 83 and eventually breached five weeks channel, signalling pause in upward momentum for dollar and further appreciation for Rupee in coming weeks

• At present, index has bounced after retracing 44% of prior up (15183- 18887) move seen over three month period and approaching price/time wise maturity of correction. Thus, we expect index to hold the key support of 17200 in coming weeks as it is confluence of: a) 80% retracement of past September-December 2022 rally 16748-18887, placed at 17175 b) price parity of December decline 18887-17774 projected from end of January high of 18201, is placed at 17132

• In the coming session, index is slated to open with a gap down owing to global volatility. While a pull back after gap ups are not ruled out that are likely to meet with strong hurdle around 17550-17600 zone. Hence use intraday bounce towards 17545-17570 to create intra day short recommendation for target of 17457 with stoploss of 17613

Nifty Bank: 41256

Technical Outlook

• The daily price action formed a bear candle which remained contained inside previous session price range signalling consolidation for the last three sessions after last week strong up move .

• Going ahead, we expect the index to extend last six weeks consolidation in the broad range of 42000 -39500 levels . Only a close above 42000 levels will signals further up move in the coming sessions

• Structurally, since CY20 (Covid lows) intermediate corrections have lasted for 9 -11 weeks in a row . In the current scenario as well, index is seen maintaining the rhythm and resuming up move after 11 weeks of corrective decline . The index in the last 11 weeks has retraced just 65 % of its preceding 10 weeks rally of October –December (37387 -44151 ) . A shallow retracement signals a base formation and a positive price structure

• The weekly stochastic is seen consolidating above the neutral reading of 40 signaling continuation of positive bias in the coming weeks

• The index has key support around 40000 levels being the confluence of (a) 80 % retracement of the current up move (39600 -41671 ) (b) the presence of long term 200 days EMA is also placed at 40074 levels In the coming session, the index is likely to open gap down amid weak global cues . Index is expected to trade with corrective bias forming lower high -lower low . Hence . Hence after a gap down opening use intraday pullback towards 41180 -41260 for creating short position for the target 40930 , maintain a stoploss of 41370

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