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Nifty: 15832

Technical Outlook

• After initial gap down, the index gradually recouped intraday losses. However, failed to sustain at higher levels, leading Nifty to settle tad below 15800 mark. The daily price action formed a small bull candle carrying lower high-low, indicating extended breather amid elevated volatility

• Key point to highlight is that, over past two sessions index has retraced 38.2% of preceding three sessions up move. The slower pace of retracement signifies healthy retracement that gradually paves the way for next leg of up move. We expect index to resolve higher and eventually head towards 16200 as it is confluence of: a) 61.8% retracement of June decline (16794- 15183) b) upper band of negative gap recorded on June 13 (16201-15878). However, we believe the move towards 16200 would be in a zig-zag manner as bouts of volatility owing to global uncertainties cannot be ruled out. Thus, any dip towards 15400 should be used as buying opportunity as we believe immediate support for the Nifty is placed at 15200

• The broader market indices have been sustaining well above last week’s hammer like candle. In three instances over the past decade, intermediate correction in the Nifty Midcap, Small cap indices have been to the tune of 28% and 40%, respectively. At present, both indices have bounced after correcting 25% and 34%, respectively. Therefore, base formation from here on would set the stage for a technical pullback in coming weeks

• The sentiment indicators have bounced back from extreme oversold reading of 12. Historically, the reading of percentage of stocks above 200 DMA below 15 signifies extreme pessimism in the markets that eventually leads to a technical pullback to the tune of minimum 10% in subsequent three months. In current scenario, we expect the index to maintain the same rhythm in coming months

• In the coming session, index is likely to open on a flat note tracking muted global cues. We expect volatility to remain high owing to monthly expiry and global volatility. Hence, use intraday dip towards 15750-15782 for creating long position for the target of 15867

NSE Nifty Daily Candlestick Chart

Nifty Bank: 33811

Technical Outlook

• The daily price action formed a doji candle with shadows in either direction which maintained lower high -low signaling corrective bias

• Volatility is likely to remain high in today’s session on account of the monthly expiry and the volatile global cues .

• Going ahead, we expect buying demand to emerge around 32500 -32800 levels being the 80 % retracement of the previous week up move (32335 -34180 ) . The index is expected to gradually resolve higher and head towards 34500 levels in coming weeks as it is the higher band of bearish gap area of 13th June 2022 (34483 ) and 61 . 8 % retracement of previous major decline (36083 -32290 )

• The index has key immediate support around 32100 -32300 levels as it is the last two week’s almost identical lows which also confluence with the March 2022 lows placed at 32155 levels

• Amongst momentum oscillators, weekly RSI has formed a positive divergence with last week reading of 38 against May 2022 reading of 37 while price made new low . Such divergence is indicating receding downward momentum and likely to trigger further technical pullback in coming weeks

In the coming session, index is likely to open on a soft note amid muted global cues . We expect the index to trade in a range and consolidate around 33000 levels . Hence use intraday dips towards 32980 -33060 for creating long position for the target of 33320 , maintain a stoploss at 32870

Nifty Bank Index – Weekly Candlestick Chart

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