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Healthy consolidation would pave the way to challenge lifetime highs…

Technical Outlook

• The Nifty concluded the volatile week on a subdued note where in it oscillated in just 200 points range. As a result, weekly price action formed a bear candle carrying higher highlow, indicating profitbooking inthe vicinity oflife time highs

• Going ahead, we expect Nifty to consolidate in the broader range of 18900-18400 that would make market heathy and cool off overbought condition after 12% rally seen over past thirteen weeks. Subsequently, a decisive close above 18900 would lead to acceleration of upward momentum towards 19300 in the month of July. Thus, buy on dips would be the prudent strategy to adopt as the strong support for the Nifty is placed at18400 levels.

• Amidst ongoing consolidation we expect Small caps to continue with its relative outperformance as Nifty Smallcap250 index has given a breakout from 20-month consolidation. Pattern implication suggest another 20-25% rally over next 12– 15 month period. Thus, any profit booking from higher levels should not be construed as negative instead it should be used to accumulate quality stocks

• Sectorally, we expectBFSI, auto, IT, pharma to remainin focus

• On stock front, in large cap we prefer HDFC Bank, HCL Tech, Bharti Airtel, Bank of Baroda, Sun Pharma, Eicher Motors, Titan while in midcap Ashok Leyland, Balkrishna Industries, Granules, Birlasoft, Kalyan Jewellers, Welspun Enterprises, Dhampur Sugarremainin focus

• Structurally, the index has maintained the higher high-low formation on the weekly chart despite rise in volatility, indicating elevated buying demand that makes us confident to retain supportbase at 18400 as it is confluence of:

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at18486

• b) 61.8% retracement of current up move (18060-18886), at 18376

• c) 50 daysEMA isplaced at18360

• d) current month’s low of 18464

Nifty Bank: 43724

Technical Outlook???????

• The Daily price action formed a Doji with lower high -low indicating extended consolidation within the downward slopping channel that encompasses corrective phase over past three weeks

• Index needs to witness follow through strength above higher band of channel at 44200 to indicate conclusion of corrective phase else extended consolidation in th e 43300 -44200 to continue

• Bank Nifty has been forming a lower high -low on weekly charts for past three weeks indicating healthy consolidation after sharp 15 % rally from March lows (38613 )

• From structural perspective, such corrective phase would make medium term trend healthier and would provide fresh investment opportunity with favourable risk -reward

• The index has immediate support at 43400 levels being the confluence of the last two weeks identical lows and the rising 50 -day ema

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