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Nifty: 16356

Technical Outlook

• The index witnessed a roller coaster ride as the Nifty oscillated by ~600 points during the sessions. After the RBI Policy outcome index recouped intraday losses and made a failed attempt to sustain above previous sessions high. The daily price action formed a bear candle carrying lower high-low, indicating continuance of corrective bias. In the process, the overall market participation remained lower as, NSE daily cash turnover (|43800 crores) remained below its one month average of |55500 crores

• Going ahead, for a meaningful pullback to materialise index need to form a higher high-low along with a decisive close above previous session high (16514). Else continuance of corrective bias towards 16100 as long as lower high-low is maintained. Meanwhile, current week’s high of 16600 would continue to act as immediate hurdle in coming sessions as it is 61.8% retracement of current decline (16793-16293)

• Structurally, the lack of faster retracement on either side signifies prolonged consolidation in the broader range of 16600-16100. over past seven sessions index has retraced 50% of preceding 3 sessions up move (15903-16695), indicating slower pace of retracement that makes us confident to retain support base at 16100 as it is 61.8% retracement of current up move (15735-16793)

• Broader market indices extended breather over fourth consecutive session after reacting from the upper band of past three weeks range. Going ahead, only a decisive close above last week’s high would be lead to extension of pullback in Nifty midcap and small cap indices. Failure to do so would lead to prolongation of consolidation wherein broader market would relatively underperform the benchmark

In the coming session, index is likely to open on a subdued note tracking muted global cues. The formation of lower high-low signifies corrective bias. Hence, use intraday pullback towards 16358-16385 for creating short position for the target of 16271

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34946

Technical Outlook

• The daily price action formed a bear candle as it opened higher and formed an intraday high of 35450 post RBI policy, but failed to sustain at higher levels and gave up its intraday gains to close near the low of the session indicating extended breather .

• The index is likely to extend the current breather in the broad range of 34000 -35500 , however we expect it to hold above the key support area of 34000 . Hence, the current breather should not be seen as negative instead dips towards 34000 -34500 levels should be used as a buying opportunity for gradual up move towards 36100 levels being the 61 . 8 % retracement of the April -May decline (38765 -33002 )

• The index has already taken seven sessions to retrace just 38 . 2 % of its preceding eight sessions strong up move (33180 -36083 ) . A shallow retracement signals a higher base formation .

• The index has key support around 34000 levels as it is the 61 . 8 % retracement of the previous up move (33002 -36083 ) placed at 34100 levels

• Among the oscillators the daily stochastic has approached oversold territory with a reading of 15 signaling supportive effort likely at lower levels in the coming sessions

In the coming session, index is likely to open on a soft note amid weak global cues . We expect it to trade in a range with corrective bias . Hence use intraday pullback after a negative opening towards 35050 -35130 for creating short position for the target of 34810 , maintain a stoploss at 35240

Nifty Bank Index – Weekly Candlestick Chart

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