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Technical Outlook

Equity benchmarks extended their losing streak over second consecutive week tracking elevated global volatility. The Nifty settled at 17026 down 4.2%. In the coming session, the index is likely to open on a positive note. We expect volatility to remain high near key support threshold of 16900. Hence, use dips towards 16950-16985 for creating long position for target of 17067. We believe, ongoing corrective phase to get anchored around 16900-16700 based on following observation over past 20 months:

A) Since May 2020, during all 3 corrections index retraced 38% of preceding rally. 38% retracement of current rally is placed at 16900 B) since May 2020, index has not corrected for more than 10%. In current scenario, 10% correction from life high of 18600 will mature at 16740 . In current juncture, as Nifty has already corrected 8.7% from life highs of 18600 amid oversold placement of weekly stochastic, we expect markets to maintain this rhythm. Thus, investors should not panic during ongoing corrective phase, instead dips should be capitalized to build quality portfolio over medium term perspective.

Nifty Weekly Chart

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