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Nifty

• The Nifty concluded a volatile week on a positive note wherein it oscillated by ~900 points during the week. The fag end buying demand tracking global up move fuelled by lower-than-expected US inflation number helped the index to recover intra-week losses and witness highest ever weekly closing of 18350. The weekly price action formed a bull candle carrying a higher high-low, indicating continuance of positive bias. The formation of lower shadow signifies elevated buying demand

• We expect the Nifty to challenge the all-time high of 18600 in the coming week and gradually head towards 18900 by December 2022. The formation of higher peak and trough on the larger degree chart supported by multi sector participation makes us reiterate our constructive stance. Thus, temporary breather from here on should be capitalised on as incremental buying opportunity as we do not expect the index to breach the key support of 17800. Our positive stance on the market is based on following observations: a) the Nifty has given a resolute breakout from 13 month consolidation phase indicating end of corrective phase and beginning of structural uptrend, b) US$, INR pair has reversed from its key resistance around 83 mark on expected lines, supported by similar sharp reversal in US dollar index from multi year trend line resistance. Sequential lower high-low formation in US$, INR pair to favour inflows in Indian equities, c) India VIX has breached six month’s low below reading of 15 indicating low risk perception from market participants, d) global equity indices made sharp bullish reversal this week post favourable US CPI numbers. Dow Jones industrial average has given a breakout from 11- month long declining channel indicating end of corrective phase and expected to pose a technical pullback thereby supporting overall bullish sentiment

• On the sectoral front, we expect BFSI, IT, consumption and infra to drive the market higher. Nifty IT index has concluded a breakout from 11 month’s declining channel signalling end of corrective phase both price/time wise. Expect resumption of uptrend that is well supported by bullish reversal in US Nasdaq index from bearish extremes

• On the stock front, in large caps, we prefer Reliance Industries, SBI, Bajaj Finserv, TCS, L&T, Tata Steel, DLF, Maruti Suzuki while in midcap space we like Coforge, Jindal Steel and Power, Heidelberg Cement, Asahi India, Brigade enterprises, RVNL, Redington, Action Construction, Cochin shipyard.

• Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us confident to revise support base upward at 17800 as it is 38.2% retracement of past four week’s rally 16950-18357

• The broader market indices are forming a higher base above 52 weeks EMA. We expect, Nifty midcap, small cap indices to accelerate upward momentum and witness catch up activity against the Nifty

• In the coming session, index is likely open on a flat note amid firm global cues. We expect index to endure its northbound journey. Thus, intraday dip towards 18380-18412 should be used to create intraday long positions for target of 18497

Nifty Bank

• The weekly price action formed a bull candle with a higher high -low signaling continuation of the of the positive momentum

• The index during last week has generated a breakout above the last eight weeks range (41840 -37387 ) signaling extension of the up move . Going forward, we expect the index to gradually head towards 43500 levels in the coming weeks being the 138 . 2 % external retracement of the recent breather (41840 -37386 ) . Hence, any dips should be used as an incremental buying opportunity in quality banking stocks

• 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 40500 mark being the confluence of the (a) 38 . 2 % retracement of the last six weeks up move (37387 -42345 ) placed at 42500 (b) the 10 weeks EMA currently placed at 42400 levels

• Among the oscillators the weekly MACD remain in strong up trend and is seen sustaining above its nine periods average thus validates positive bias In the coming session, index is likely to open on a flat to positive note amid firm global cues . We expect the index to continue with its positive momentum while maintaining higher high -low . Hence after a positive opening use intraday dips towards 42040 -42120 for creating long position for the target of 42390 with a stoploss at 41930

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