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Nifty : 24835

Technical Outlook

Week that was…

Equity benchmarks extended gain over eight consecutive week despite elevated volatility owing to Union Budget and clocked a fresh All Time high of 24861. The Nifty settled the week at 24835, up 1.3%. The broader market relatively outperformed as Nifty midcap gained >3% while small cap gained 2.5%. Sectorally, pharma, auto, consumption remained in limelight while financials, realty took a breather

Technical Outlook:

* The sharp recovery in the Friday’s session helped index to recoup intraweek losses and settle the volatile week at life highs. The weekly price action formed a strong bull candle, indicating buying demand at elevated support base of 20 days EMA

* The index has retraced past four sessions decline in just two sessions, highlighting faster pace of retracement. The faster retracement signifies inherent strength that makes us revised target of 25200 for coming months. In the process, 24400 would act as immediate support

* Key point to highlight is that, since start of CY24 (barring election), intermediate correction to the tune of 3%-5% while sustaining above 50 days EMA has offered incremental buying opportunity that has subsequently resulted into fresh All Time High in couple of months. Even in current scenario, index staged a strong rebound after correcting 3% from Life highs. Consequently, we maintain our buy on dips strategy which has fared well over past six months

* Our positive bias is further validated by following observations:

* A)The Bank Nifty has witnessed supportive efforts from 50 days EMA while Nifty index witnessed follow through strength post multiyear cup & handle breakout. Tracking in Banking and IT space bodes well for next leg of up move as cumulatively both indices carry >50% weightage in Nifty

* B)Net of Advance/Decline (Nifty500) bottomed out from its bearish extreme reading (-450) around Union Budget and made a sharp reversal

* C)India Vix which is a gauge of market sentiment, crashed 18% for the week as anxiety settled post Budget event, indicating that market participants are not expecting a significant volatility

* D) In US major sector rotation has taken place over past few weeks ahead of US Fed policy in coming week. Dow Jones and Russell 2000 small cap index both have given a significant breakout indicating that rally in US is broadening now

* Structurally, the formation of higher peak and trough signifies buying demand at elevated support base that makes us revise support base at 24400 as it is confluence of:

* A) 61.8% retracement of last week’s up moves 24074-24861

* B) 20 days EMA is placed at 24340

Nifty Bank : 51296

Technical Outlook

Day that was :

Nifty Bank attempted recovery with broader market rally on Friday from oversold zone . Index gained 407 points or 0 .80 % to settle at 51296

Technical Outlook :

* The Index opened lower on Friday and made a steady recovery for rest of the session after testing low of 50438 as buying demand emerged from oversold reading . Price action formed a bull candle with close above previous session high after five session decline, indicating pause in downward momentum . However for meaningful recovery, index need to have a follow through buying which could lead it towards key short term hurdle, else broader consolidation to continue in the broad range of 49600 -52000 levels

* Going forward, key resistance is placed at 52000 being past two week highs while key support is placed at 49600 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema

* Price structure : We observe that index is undergoing retracement from overbought readings after 15 % rally . Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 9 % from highs and in current context 5 . 5 % correction is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation above 52 -week ema around 49500 levels

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