IGI Logo

Nifty : 24800

Technical Outlook

Day that was…

Equity benchmarks extended gains over fourth consecutive session and clocked a fresh All Time High tracking firm global cues. The Nifty gained 188 points or 0.7% to settle the session at 24800. However, market breadth turned negative with A/D ratio of 1:1.9 as the broader market relatively underperformed. Sectorally, IT, Financials outshone while metal, consumer durables underperformed

Technical Outlook:

* The Nifty recouped initial losses and settled the weekly expiry session at life highs. The daily price action formed a bull candle carrying higher high-low, indicating continuation of uptrend

* In line with our view, Nifty resolved higher and approached our target of 24800. Going ahead, follow through strength above 24800 (on a closing basis) would open the door for next leg of up move. Failure to do so would lead to consolidation in 24800-24300 range amid stock specific action. Key point to highlight is that, past seven week’s 17% rally hauled weekly and monthly stochastic oscillator in overbought territory (placed at 96 and 91, respectively). Thus, temporary breather should not be considered as negative instead dips would offer incremental buying opportunity wherein immediate support is placed at 24300. We expect focus to remain on sectoral churns and stock specific action amid progression of Q1FY25 earnings season. Our positive bias is corroborated with following observations:

* A) The faster pace of retracement helped IT index to resolve out of 10 quarters cup & handle pattern, following rate cut expectations in US. Given the significant weightage of IT and banking sector in Nifty, this could act as a cushion going forward

* B) Strong domestic fund flow, firm global setups and Budget expectations along with monsoon progression domestically would be key factors influencing market direction

* On the broader market front, Nifty midcap, small cap indices have gained 23% and 28%, respectively which hauled weekly stochastic oscillator in overbought territory (placed at 95). Thus, we recommend to be choosy in this segment as retracement of rally cannot be ruled out and could lead to minor profit booking

* Structurally, the formation of higher peak and trough supported by improving market breadth makes us revise support base upward at 24300 as it is confluence of:

* A) 38.2% retracement of past three weeks up moves 23350-24387

* B) 20 days EMA is placed at 24200

Nifty Bank: 52620

Technical Outlook

Day that was :

Nifty Bank index recouped Tuesday’s losses and settled the session at 52621 , up 224 points or 0 . 4 % . PSU banking space consolidated while Private banks and NBFC companies relatively outperformed

Technical Outlook :

* The index staged a strong recovery in the second half of the session that aided index to close near day’s high . Consequently, daily price action resulted into bull candle that engulfed past two sessions price activity that clearly shows supportive efforts emerged from rising 21 -day ema (52000 )

* The close above previous session high confirms pause in downward bias and open the door for a bounce back towards upper end of consolidation range at 53500

* Going forward, expect index to hold immediate support and last week low of 52000 and extend ongoing consolidation in 52000 -53500 band . Further, a decisive close above 53500 would be a sign of extension of rally

* PSU banking stocks have witnessed some value buying on Monday after underperforming for few weeks . WE believe higher bottom formation is made by PSU banking stocks ahead of earnings and eventually expected to head higher

* We revise short term support to last week’s low of 52000 which also coincide with rising 21 -day ema

* Price structure : We observe that index is maintaining its higher high -low formation on multiple time frames and remain in steady uptrend and short term declines are attracting buying support . Hence consolidation in the short term will help index to undergo higher base formation and work out of overbought readings

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631