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Nifty : 19646

Technical Outlook

• The index pared initial gains and extended losses and closed below past two week’s low for the first time since end of March. As a result, weekly price action formed a bear candle carrying lower high-low, indicating pause in upward momentum after recentsharp up move.

• Going ahead, we expect Nifty to prolong the ongoing consolidation in the broader range of 19900-19200 wherein stock specific action would prevail amid progression of ongoing earning season. In a secular bull market, secondary correction make market healthy by cooling off overbought conditions. Thus, accumulating quality stocks on dips would be the prudent strategy to adopt at current juncture.

• The midcap index has endured its record setting spree over eleventh consecutive week despite profit booking in the benchmark, highlighting inherent strength. However, past five months remarkable 30% rally hauled weekly stochastic oscillator in overbought territory while breadth indicator (% of stocks above 200 DMA) has approached overbought condition (placed at 91) , suggesting possibility of temporary breather at higher levels can not be ruled out. Thus, focus on accumulating quality stocks in a staggered manner.

• On the global macro front, Brent crude oil and Dollar Index have seen technical pull backs in slower pace after past two months decline. We expect upsides to be capped at $87 and 103.5, respectively. As domestic equity market has an inverse relationship with the aforementioned macro factors, we believe resumption of downward momentum in crude oil and dollar index will fuel the rally in domestic equity market

• We believe, any extended breather from hereon would get anchored around key support of 19200 as it is confluence of:

• a) 61.8% retracement of current up move (18645-19991), at 19160

• b) 50 days EMA is placed at 19174

• c) July month’s low is placed at 19234

• Sectorally, Pharma and Power sectors have exhibited resilience last week amid volatility. We expect these sectors to relatively outperform while rate sensitives like BFSI, Real estate are expected to witness buying on dips opportunity in coming weeks

• On stock front, in large cap we prefer HDFC Bank, TCS, Ambuja Cements, NTPC, Hindalco, Lupin, Tata Steel, GAIL while in midcap Astral, Birlasoft, Bank of Maharastra, HEG, Kajaria Ceramics, Laurus Lab, Praj Industries will remain in focus

Nifty Bank: 44879

Technical Outlook

• The price action for the week formed bear candle with lower high -low formation indicating corrective bias as index entered overbought trajectory after strong 20 % rally from March lows . In the process index also breached prior month lows . Index however attracted some buying demand near its 50 -day ema of 44500

• Going forward we expect 45500 to act as immediate hurdle in coming week while decisive breach below 44500 may lead to panic reaction towards 43800 in the short term which will present buying opportunity

• Structurally ongoing corrective phase would make markets healthy from medium term perspective . Follow buy on dips template

• In the coming week inflation numbers and RBI policy outcome would set the tone for further directional bias

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