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Nifty: 15639

Technical Outlook

• The index witnessed a gap up opening (15350-15455) and traded upward throughout the session as intraday pullback were bought into. As a result, daily price action formed a bull candle carrying higher highlow after 11 sessions decline, indicating abating downward momentum as index witnessed follow through strength to Monday’s inside bar amid oversold condition

• Going ahead, we expect index to extend the ongoing pullback towards 15800 mark. Further, a decisive close above 15800 along with improving market breadth will confirm end of corrective phase and open the door for extended pullback in coming sessions. The level of 15800 remains important to watch on the upside as it is confluence of: A) Downward slanting trend line drawn adjoining Subsequent highs of June (16794- 16493), placed around 15800 B) 38.2% retracement of June decline (16794-15183) C) Lower band of negative gap recorded on 13th June (16201-15878) • Structurally, the sentiment indicators are approaching their bearish extremes. Historically, such bearish extreme conditions posses distinctive nature of a technical pullback in subsequent weeks. Historically, reading of percentage of stock above 200 DMA below 15 signifies extreme pessimism in the markets. Currently index bounced after recording bearish extreme of 12 (which is lowest since March 2020) suggesting technical pullback in following weeks

• The formation of higher high-low on the daily chart along with across sector participation makes us revise immediate support base at 15200. Only a breach below 15200 (on a closing basis) would lead to extended correction towards major support zone of 14800-14600 as it is confluence of: A) 80% retracement of CY-21 rally (13596-18604), at 14600 B) implicated target of recent consolidation breakdown 16800- 15700, is placed at 14600

• On the broader market front, in three instances over past decade, maximum bull market correction in the Nifty Midcap, Small cap indices have been to the tune of 28% and 38%, respectively. In current scenario both indices have bounced after correcting 25% and 34%, respectively. The follow through strength would confirm the pause in downward momentum, else possibility of 3-4% correction from hereon cannot be ruled out amid oversold territory which would set the stage for a technical pullback in coming weeks

• In the coming session, index is likely to open on a subdued note tracking muted Asian cues. After Tuesday’s sharp up move, retracement should be utilised as buying opportunity. Hence, use intraday dip towards 15510-15542 for creating long position for the target of 15627

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 33191

Technical Outlook

• The daily price action formed a high wave candle with a higher high -low signaling pullback from extreme oversold territory after the recent sharp decline . The index in the process closed above the breakdown area of 33000 levels .

• Going ahead, index sustaining above Tuesday low (32797 ) will signal continuation of the current pullback towards the immediate hurdle of 33800 levels being the confluence of the lower band of the last Monday’s gap down area (33774 - 34345 ) and the 38 . 2 % retracement of the last three weeks decline (36083 -32291 ) .

• The Index need to start forming higher high -low in the daily chart on a sustained basis for any meaningful technical pullback to materialize

• The index has major support around 30500 -31000 levels being the confluence of the following technical observations :

• (a) 80 % retracement of the previous major rally of December 2020 -October 2021 (28976 -41829 )

• (b) previous major low of April 2021 is also placed at 30405

• Among the oscillators the daily stochastic has rebounded from the oversold territory and is in up trend thus supports the continuation of the current pullback in the coming sessions In the coming session, index is likely to open on a soft note amid weak Asian cues . We expect the index to trade with positive bias while holding above Tuesday low (32841 ) . Hence use intraday dips towards 32900 -32980 for creating long position for the target of 33230 , maintain a stoploss at 32790

Nifty Bank Index – Weekly Candlestick Chart

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