Bank Nifty index is likely to open on a positive note amid firm global cues - ICICI Direct
Nifty: 16605
Technical Outlook
• The index started weekly expiry session on a positive note. However, Buying demand from Wednesday’s gap area helped index to approach our earmarked target of 16600. The daily price action formed a bull candle carrying higher high, indicating continuation of elevated buying demand.
• The formation of higher high-low coupled with sustenance above 200 days EMA and across sector participation signifies inherent strength that makes us confident to revise target to the psychological mark of 17000 in coming weeks as it is 61.8% retracement of April-June decline (18114-15183). However, the move towards 17000 would not be in a liner manner as bouts of volatility owing to U.S Fed meet and monthly expiry in coming week amid overbought conditions of daily stochastic oscillator (currently placed at 95). Only a decisive close below previous session low (16500) would lead to a breather, else continuation of upward momentum. However, temporary breather from hereon should not be construed as negative instead dips should be capitalised as incremental buying opportunity
• Key point to highlight is that, the breadth indicator, measured by percentage of stocks above 50 DMA has seen significant improvement with a reading of 61% compared to April end reading of ~45%, indicating broad based participation that augurs well for durability of ongoing up move which makes us confident to revise support base upward at 16100 as it is confluence of:
• a) 61.8% retracement of recent up move (15858-16626)
• b) positive gap recorded on 18th July (16050-16142)
• c) 20 days EMA is placed at 16120
• On the broader market front, the benchmark index Nifty and midcap index have approached their 200 days EMA, however small cap index is still 6% away from its 200 days EMA. Thus, we expect catch up activity to be seen in the broader market. Hence, focus should be on accumulating quality mid and small caps amid ongoing Q1FY23 earning season
• In the coming session, index is likely to open on a positive note tracking firm global cues. We expect the index to consolidate with positive bias while maintaining higher high-low. Hence, after a positive opening use intraday dip towards 16540-16572 for creating long position for the target of 16663
NSE Nifty Weekly Candlestick Chart
Nifty Bank: 35720
Technical Outlook
• The daily price action formed a bull candle with a higher high -low signaling positive bias . The index has formed a higher high in the monthly chart after three months highlighting strength and continuation of the current pullback rally
• The index on Thursday session has tested our immediate target of 36300 . The immediate bias continues to remain robust hence follow through strength above 36300 will open further upside towards 37500 levels in the coming months being the 80 % retracement of the previous major decline (38765 -32290 ) placed at 37430 levels
• The up move towards 37500 levels is likely to be in a non -linner manner, bouts of volatility owing to volatile global cues cannot be ruled out . Moreover, the sharp up move of 1800 points in just five sessions has led to daily stochastic at an overbought territory with a reading of 93. Hence a couple of days of breather cannot be ruled out, which should not be seen as negative instead dips towards 35000 -35300 should be capitalised as a buying opportunity
• Key observation in the recent market correction and during the last four -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 on the weekly chart makes us confident to revise the support base higher towards 34500 levels as it is the confluence of the last week low and the 50 % retracement of the recent up move (33080 -36331 )
• 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 firm global cues . We expect the index to trade in a range with positive bias while maintaining higher high -low . Hence use intraday dips towards 35980 -36060 for creating long position for the target of 36310 , maintain a stoploss at 35860
Nifty Bank Index – Weekly Candlestick Chart
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