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Nifty: 16058

Technical Outlook

• The index started the session with a negative gap and subsequently drifted southward as intraday pullbacks were short lived. As a result, the daily price action formed a bear candle carrying lower high-low, indicating extended breather amid stock specific action as broader market relatively outperformed

• The index has taken a breather after >750 points up move seen over past five sessions that hauled daily stochastic oscillator in overbought territory (which was placed at 93 on Monday). Going ahead, we expect index to trade with a positive bias and gradually head towards 16600 in coming weeks. In the process, extended breather should not be construed as negative instead dip towards 15800-15700 should be used as incremental buying opportunity as strong support for the Nifty is placed at July low of 15500. Our positive stance on the Nifty is based on following observation:

• a) the index is sustaining above the breakout zone of downward sloping trend line (drawn adjoining April-June highs), indicating conclusion of two months corrective phase

• b) current pullback is qualitatively better as compared with earlier pull backs since April in terms of market breadth (measured by percentage of stocks above 50 DMA (50%) strongest in two months indicating broad based participation)

• c) our target of 16600 is based on 50% retracement of CY22 decline (18350-15183) coincided with 200 days EMA

• The broader market indices have been relatively outperforming the benchmark, indicating stock specific action as we enter the Q1FY23 earning season. The Nifty midcap and small cap indices have been maintaining higher high-low formation on the weekly chart signifying buying demand at elevated support base. We expect broader market to endure their pullback in coming weeks. Thus, dips should be capitaslied to accumulate quality midcaps.

• In the coming session, index is likely to open on a positive note amid decline in crude oil prices. We expect index to hold the psychological mark of 16000 and stage a bounce. Hence, use intraday dip towards 16040-16070 for creating long position for the target of 16163

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35132

Technical Outlook

• The daily price action formed a bear candle which remained contained inside previous session price range signaling breather after the last three weeks strong up move .

• The recent strong up move of more than 3000 points in the last three weeks has hauled daily stochastic in overbought territory at 95 , indicating possibility of temporary breather cannot be ruled out in the coming couple of sessions . However, the bias remain positive and dips towards 34000 - 34300 levels should be used as an incremental buying opportunity for the next leg of up move towards 36000 levels in the coming weeks as it is the confluence of :

• (a) the high of June 2022 is placed at 36083 levels • (b) 61.8% retracement of the last 3 months’ decline (38765 - 32290 ) is also placed around 36200 levels

• Key observation in the recent market correction and during the last three -week pullback is that the Bank Nifty is relatively outperforming the Nifty . It is also highlighted in the Bank Nifty/Nifty ratio chart as it is seen breaking above the falling supply line joining recent highs highlighting strength and continuation of the current outperformance

• The formation of higher high -low in the weekly time fame make us confident to revise the support base higher towards 33500 levels as it is the confluence of the last week low and the 61 . 8 % retracement of the current up move (32290 -35543 )

• Among the oscillators, the weekly stochastic remain in strong up trend thus supports the overall positive bias in the index .

In the coming session, index is likely to open on a positive note amid decline in crude oil prices . We expect the index to trade in a range with positive bias while holding above 35000 levels . Hence use intraday dips towards 35010 -35080 for creating long position for the target of 35330 , maintain a stoploss at 34890

Nifty Bank Index – Weekly Candlestick Chart

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