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Nifty:18599

Technical Outlook

• The index started the week with a bullish gap to open above the recent range (18499-18581) and subsequently oscillated in 60 points range throughout the day. As a result, daily price action formed a small bear candle carrying positive gap below it, indicating acceleration of upward momentum.

• Going ahead, we maintain our positive stance and expect Nifty to gradually retest the life time highs of 18887 in the June month. The breakout from recent consolidation 18500-18000 signifies acceleration of upward momentum that in turn confirms higher base formation around psychological mark of 18000. Thus, any dip from hereon should be used to build quality portfolio from medium term perspective. In the process, we expect broader market to relatively outperform. Our positive stance is further validated by following observation:

• A)The breakout from ongoing consolidation (18500-18000) helped index to settle at five months high, indicating acceleration of upward momentum.

• B)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

• C)FII’s continued their buying spree in May with 25k Cr inflows despite dollar index inching up by 3%. 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 17% 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 (18060-18641) coincided with 20 days EMA placed at 18236

• In the coming session, index is likely to open on a flat to positive note tracking mixed global cues. We expect the stock to continue with its positive momentum while maintaining higher high-low. Hence, use intraday dip in June future towards 18635-18665 for creating intraday long positions for target of 18754 with a stoploss of 18597.

Nifty Bank: 44311

• The daily price action formed a high wave candle with a higher high -low and a positive gap below its base (44067 -44194 ) signalling continuation of the up move . The index opened gap up and formed an all time high (44483 ) in the first half of trade . However, profit booking at higher levels saw the index gave up some of its gains and closed the session with a gain of 0 . 7 %

• 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 3

• In the coming session, the index is likely to open on a flat to positive note tracking mixed global cues . Index to trade with positive bias while maintaining higher high -low . Hence, create long position in the range of 44150 -44230 for the target of 44490 , maintain stoploss at 44040

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