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Nifty

• Index started the session on a positive note. However, profit booking from overbought conditions ahead of Fed event dragged index towards last sessions low of 18060. The daily price action formed a bear candle that engulfed Tuesday’s trading range, indicating breather after recent sharp up move. In the process, stock specific action prevailed amid advancement of Q2FY23 earning season

• The index has taken a breather after > 1200 points rally over past three weeks which hauled daily stochastic oscillator in overbought conditions (placed at 90). However, the broader bullish structure remains intact as index has been forming higher peak and trough on the larger degree chart that makes us confident on reiterating our constructive stance with a target of 18600 by December 2022. Thus, bouts of volatility owing to global developments should not be construed as negative. Instead, dips should be used as buying opportunity as we do not expect index to breach the key support of 17500 in coming weeks. Our positive stance is based on following observations:

• a) breakout from past 12 month’s falling trend line confirms conclusion of corrective bias, auguring well for extension of ongoing up move

• b) historically, over the past two decades, Q4 returns for the Nifty have been positive (average 11% and minimum 5%) on 15 out of 21 occasions (70%). History favours buying dips from here on

• c) Indian equities continued to relatively outperform their global peers, showing inherent strength

• d) Dollar index has registered breakdown from four week’s range while US Dollar/INR pair retreated from upper band of long term rising trend line at 83.30. Going ahead, a further cool-off in Dollar index would provide stability to the rupee against the US dollar and support Indian equities in coming weeks

• Structurally, breakout from one year falling trend line confirms structural improvement that augurs well to revise support base at 17500 as it is 50% retracement of past three week’s rally 16950-18178

• Broader market indices have rebounded after forming a higher base above 100 days EMA. We expect the Nifty midcap and small cap indices to resolve higher and witness catch up activity against the Nifty amid advancement of earning season

• In the coming session, the index is likely to witness gap down opening tracking weak global cues post Fed event. However, post initial decline we expect supportive efforts to emerge in the vicinity of 17900 range. Hence, use dips to create intraday long positions in the range 17932- 17962 for target of 18047

Bank Nifty

• The index in the last six sessions is seen trading in a narrow range of 40800 -41600 signalling consolidation after the recent strong up move . The daily price action formed a small bear candle with a lower high -low as the index continues to consolidate in a narrow range ahead of the US FOMC rate decision

• We believe dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunity in quality banking stock . We expect index to surpass the all -time high (41840 ) in the coming sessions and extend the current up move towards 42900 levels in the coming week being the 123 . 6 % external retracement of the recent breather (41840 - 37386 ) .

• Nifty PSU banking stocks continue to outperform and the PSU bank index has recently posted a resolute breakout above CY21 highs and past five years down trend line indicating strong structural uptrend . While large caps have seen strong traction, we expect smaller PSU banks to catch -up and witness strong upward momentum

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength . It has recently generated a faster retracement on higher degree as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting robust price structure

• Amongst momentum oscillators, weekly stochastics remain in uptrend and has recently generated a buy signal thus supports the positive bias in the index

• The Bank Nifty has support at 39800 mark being the confluence of the (a) 38 . 2 % retracement of the last four weeks up move (37387 - 41530 ) placed at 39850 (b) the 20 days EMA currently placed at 40030 levels

• In the coming session, index is likely to open on a negative note amid weak global cues . We expect the index to trade in a range while taking support around 40500 -40600 levels . Hence use intraday dips towards 40600 -40680 for creating long position for the target of 40930 with a stop loss at 40490

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