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Nifty : 18771

Technical Outlook

• The index started the session on a positive note however, profit booking near Lifetime High dragged index lower. As a result, daily price action formed a bear candle carrying lower low, indicating prolonged consolidation amid stock specific action.

• Going ahead, we maintain our positive stance and expect Nifty to challenge lifetime highs of 18887 and open the door to gradually head towards 19300 in the month of July. However, the move towards 19300 would be in a non linear manner as bouts of volatility owing to global development can not be ruled out. Thus, any dip from hereon should be capitalised to accumulate quality stocks from medium term perspective as we do not expect index to breach the key support of 18400.

• On the broader market front, key point to highlight is that, over past 12 weeks Nifty midcap and small cap indices have rallied 22%, 25%, respectively leading to overbought condition. However, there is no signs of weakness yet as the broader structure remains robust. Thus, any profit booking from higher levels should not be construed as negative instead it should be used to accumulate quality stocks that would pave the way for subsequent 25% rally in Midcap index over next 12 months

• Structurally, the index has maintained the higher high-low formation on the weekly chart despite elevated volatility, indicating elevated buying demand that makes us confident to retain support base 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 at 18486

• b) 50% retracement of current up move (18060-18886)

• c) current month’s low of 18464

• In the coming session, the index is likely to open on a flat to negative note tracking subdued global cues. Key point to highlight is that, over past five sessions index has been facing stiff resistance near Lifetime highs. Hence, use intraday pullback in June future towards 18870-18895 to create intraday short positions for target of 18781 with a stoploss of 18933.

Nifty Bank: 43724

Technical Outlook

• The Daily price action formed a small bear candle with higher shadow indicating continued selling pressure around higher band of declining channel and psychological 44000 zone . Barring HDFC, other constituents witnessed profit taking leading index lower in last hour of the session

• 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 two weeks indicating corrective phase 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

• In the coming session, the index is likely to open on a flat to negative note tracking subdued global cues . Key point to highlight is that, over past six sessions index has been facing stiff resistance around 44000 -44100 zone . Hence, use Intraday pullback towards 43880 -43942 for creating short position for target of 43630 with stoploss around 44062

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