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Nifty : 16628

Technical Outlook

• The index recovered early losses and closed the session near the day’s high as intraday dips were bought into. As a result, daily price action resembles bullish Engulfing candle, indicating resumption of upward momentum as buying demand emerged from 20 days moving average

• In today’s session, the index is likely to witness gap up opening tracking buoyant global cues. Going ahead, immediate resistance of 16800 would be the monitorable as sustainability above the same would open the next leg of up move. Key point to highlight is that, the index is undergoing slower pace of retracement as over past three sessions, it retraced less than 38.2% of preceding three session’s sharp up move (15903-16695). The shallow retracement signifies elevated buying that augurs well for extension of pullback towards 16800 in coming sessions as it is confluence of:

• a) 200 day’s EMA placed at 16750

• b) 50% retracement of the entire April-May decline (18115-15735)

• Structurally, the Nifty is sustaining above its three weeks range breakout area of 16400 while forming a higher high-low on the weekly chart. The current up move is backed by improving market breadth that bodes well for durability of ongoing up move. The rejuvenating market sentiment makes us confident to retain support base at 16100 as it is 61.8% retracement of current up move (15735-16695)

• Current up move in the broader market aided Nifty midcap and small cap index to approach at the upper band of past three weeks trading range. Going ahead, a decisive close above Wednesday’s high would confirm breakout from three weeks range that would open the door for extension of pullback in Nifty midcap and small cap indices. Failure to do so would lead to prolongation of range bound activity wherein broader market would undergo a base formation

• In the coming session, index is likely to witness gap up opening tracking buoyant global cues. We expect index to trade with a positive bias. Hence, use intraday dip towards 16688-16712 for creating long for target of 16798

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35613

Technical Outlook

• The daily price action formed a small bull candle as it opened lower however recovered its intraday decline to close on a flat note . The index remained contained inside previous session high -low range signaling consolidation for the third consecutive session on expected lines after a sharp up move of almost 3000 points in just seven sessions .

• Going ahead, we expect the index to continue with its last three sessions consolidation and form a higher base around the 35000 - 34500 levels . However, the current breather should not be considered as negative instead dips towards 34500 -34800 should be used as a buying opportunity for gradual up move towards 36500 levels in the coming weeks being the 61 . 8 % retracement of the April -May decline (38765 -33002 )

• Key observation in the recent market correction is that Bank Nifty is relatively outperforming the Nifty and the Bank Nifty/Nifty ratio chart is seen reversing from last 15 months falling channel highlighting strength and continuation of the current outperformance

• The index has formed a higher high -low on the weekly time frame which make us confident to revise the key support base higher towards 34000 levels as it is the confluence of :

• (a) 61 . 8 % retracement of the current up move (33002 -36083 ) placed at 34100

• (b) Last week low is also placed at 34116 levels

• Among the oscillators the daily stochastic is seen cooling off from the overbought territory and is currently placed at a reading of 65 , thus signaling continuation of the range bound trend for the coming couple of sessions

In the coming session, index is likely to open gap up amid firm global cues . We expect it to trade with positive bias after last three sessions breather while forming higher high -low . Hence after a positive opening use intraday dips towards 35830 -35890 for creating long position for the target of 36130 , maintain a stoploss at 35710

Nifty Bank Index – Weekly Candlestick Chart

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