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Nifty:

Technical Outlook

The index started the monthly expiry session on a positive note. However, it failed to capitalise on the morning up move as profit booking emerged in the vicinity of 17800. As a result, daily price action formed an inside bar that confined within Wednesday’s bear candle, indicating extended breather amid progression of the Q2FY23 earnings season

Our positive bias of the Nifty heading towards 18100 remains intact. However, we believe, the move towards 18100 would be in a non linear manner tracking bouts of volatility tracking global cues. Thus, a temporary breather from here on should not be construed as negative. Instead, dips should be used as buying opportunity. Our positive stance on the market is based on following observations: a) the breakout from three week’s consolidation (17500-16700) along with broader participation and relative outperformance against global peers augurs well for extension of ongoing up move, b) the BFSI space, which carries more than 36% weight in the Nifty, is expected to outperform as rallies are quicker and stronger while corrections are shallow, underpinning inherent strength. Within the banking space, Nifty PSU bank index posted resolute breakout above CY21 highs and past five year 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 in coming weeks, c) US dollar/INR pair has approached key trend line resistance around 83.30 mark. Since 2015 on multiple occasions the pair has reversed lower from this trend line amid extreme overbought readings on weekly timeframe. We expect the US dollar to soften from this key hurdle, which will support bullish sentiment for domestic equities, d) India VIX (which gauges market volatility) continued to drift downward to settle below 17 mark, indicating low risk perception among market participants

Structurally, formation of higher high-low on the weekly chart signifies revival in upward momentum that makes us confident to retain support base at 17300 as it is confluence of: a) 50% retracement of past two weeks rally 16950-17811 b) 50 days EMA is placed at 17338

Broader market indices have surpassed previous week’s high after forming a higher base above 100 days EMA. We expect the Nifty midcap and small cap indices to witness catch up activity against Nifty amid advancement of earning season

In the coming session, index is likely to open on a positive note tracking mixed global cues. We expect, index to trade with a positive bias wherein stock specific action would prevail amid progression of earning season. Hence, use dips to create intraday long positions in the range 17760-17792 for target of 17878

Bank Nifty : 

Technical Outlook

The daily price action formed a high wave candle which remained contained inside previous session price range signaling consolidation after the recent strong up move .

Going forward, we expect the index to maintain positive bias and surpass the all -time high (41840 ) and extend the current up move towards 42900 levels in the coming weeks being the 123 . 6 % external retracement of the recent breather (41840 - 37386 ) . Dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunity

 Nifty PSU banking stocks continue to outperform and the PSU bank index has 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

The Bank Nifty has support at 39800 mark being the confluence of the (a) last Thursday’s swing low (b) presence of 20 days EMA at 39776 levels and (c) the 38 % retracement of the last three weeks up move (37387 -41427 ) placed at 39800

In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to continue with its positive momentum . Hence after a positive opening use intraday dips towards 41370 -41440 for creating long position for the target of 41710 with a stoploss at 41260

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