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Nifty : 19711

Technical Outlook :

• The Nifty started the week on a positive note and gradually inched northward as intraday dips were bought into. As a result, index approached our earmarked target of 19700. The daily price action formed a bull candle carrying higher highlow, indicating acceleration of positive bias.

• Going forward, the sustainability above 19700 mark would lead to extension of upward momentum towards psychological mark of 20000. In the process, bouts of volatility tracking global development amid overbought conditions can not be ruled out. Thus, buy on dips would be the prudent strategy to adopt as we do not expect index to breach key support of 19300.

• Key point to highlight is that, the US dollar index breakdown below multi quarter support of 100 indicating downward acceleration towards 96 in coming months. This will act as tailwind for more foreign funds flowing in EM and India is key beneficiary given strong macros.

• On the broader market front, Nifty midcap recorded a fresh All Time High and small cap index closed at 15 months high. The current up move is backed by sturdy market breadth as currently 78% stocks are trading above 200 DMA, highlighting inherent strength that bodes well for durability of ongoing up move.

• Structurally, since March buy on dips strategy has continued to fare well as Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity as we do not expect index to breach the key support threshold of 19300, being confluence of:

• A) 38.2% retracement of current up move (18645-19731), at 19317

• B) Since March index has not closed below previous weeks low. Last week’s low is placed at 19327

Nifty Bank: 45450

Technical Outlook :

• The Daily price action formed sizeable Bull candle that engulfed past eight sessions decline indicating strong upward momentum led by HDFC bank and PSUs

• BankNifty resumed upward momentum after two weeks of corrective phase and in the process formed higher bottom at 44500 which remains key support in the short term .

• We expect index to eventually surpass highs of 45655 and gradually head towards 46300 in July as it s 138 . 2 % external retracement of Dec -Mar decline (44151 -38613 )

• Structurally, PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround . Correction in PSU stocks remains a buying opportunity

• Key short term support is placed at 44500 being last week low

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