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Nifty:18633

Technical Outlook

• The index oscillated in 90 points range while sustaining above Monday’s bullish gap area of 18499-18575. As a result, daily price action formed a small bull candle, indicating continuation of upward momentum. As a result, Nifty is shying away just 1% away from its All Time High

• The formation of higher peak and trough supported by improving market breadth signifies inherent strength that makes us confident to reiterate our positive bias and expect Nifty to gradually retest the life time highs of 18887 in coming weeks. In the process, we expect broader market to relatively outperform as it continued with its record setting spree over third consecutive session. Thus, any dip from hereon should be used to accumulate quality stocks to ride next leg of up move. Our positive stance is further validated by following observation:

• A) The breakout from ongoing consolidation (18500-18000) with a bullish gap highlighting robust price structure

• B) The Bank Nifty (which carries 38.2% weightage in the Nifty) has been clocking fresh All Time High that would provide impetus to resolve higher

• C) During recent consolidation market breadth has significantly improved supported by across sector participation as currently 63% of the stocks are trading above 200 days SMA compared to April end reading of 48%, highlighting broader market participation

• D) FII’s continued their buying spree in May with more than 25k Cr inflows despite dollar index inching up. We expect dollar index to face strong hurdle at 105 in coming weeks

• The Midcap index logged a breakout from eighteen months consolidation and recorded fresh all time high, indicating resumption of structural up trend. In the process, small cap index is still 16% away from its All Time High. Thus, we expect broader market to relatively outperform the benchmark in coming weeks wherein catch up activity would be seen in small caps

• Structurally, formation of higher high-low on the monthly chart signifies elevated buying demand that makes us confident to revise support base at 18200 as it is 80% retracement of current up move (18060-18662) coincided with 20 days EMA placed at 18275

• In the coming session, the index is likely to open on a soft note amid subdued Asian cues. Index to consolidate its recent gains with positive bias. Stock specific action will continue to remain in focus. Hence, create long position in dips towards 18620-18653 for the target of 18737, maintain stoploss at 18583.

Nifty Bank: 44436

Technical Outlook

• The daily price action formed a bull candle with a higher high -low while sustaining above Monday’s bullish gap area (44067 -44194 ) signalling continuation of the up move .

• Going ahead, we expect the index to maintain positive bias and gradually head towards 44900 levels in the coming weeks being the measuring implication of the last nine sessions range (44150 -43400 ) . However, the up move towards 44900 would be in a non -linear manner as bouts of volatility after last two months strong up move cannot be ruled out, dips should be used as a buying opportunity

• Key observation in the weekly chart of Bank Nifty is that it has witnessed a faster retracement of the 14week decline (44151 -38613 ) during Dec22 -Mar23 in just seven weeks . Faster retracement in just half the time interval indicating structural improvement from medium term perspective

• On relative terms, Bank Nifty continues to outperform the Nifty . The Bank Nifty/Nifty ratio line continues to trend higher and maintain higher high -low signalling extended period of outperformance

• The index has immediate support at 43400 levels being the confluence of the last two weeks identical lows and the 50 % retracement of the recent up move (42582 -44151 )

• Among the oscillators, the weekly 14 periods RSI remain in uptrend thus supports the overall positive bias in the index

• In the coming session, the index is likely to open on a subdued note amid soft Asian cues . Index to consolidate its recent gains amid stock specific action . Hence, create long position in dips towards 44100 -44180 for the target of 44430 , maintain stoploss at 43990

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