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Nifty : 17812

Technical Outlook

* The Nifty commenced Monday’s session with a gap down  action led by IT heavyweights (mainly led by Infosys) while strong gains in PSU banks led index to recover off day’s lows (17574). As a result, day’s price action resulted in a sizeable Bear candle that engulfed past two sessions gains indicating breather after 1000 point rally, on expected lines. Sizeable lower shadow indicate supportive efforts after gap down especially in rate sensitives

*Post Nifty’s 1000-point rally over past eight sessions, led it to short term overbought trajectory with daily stochastic reading of 96, thus raising probability of a temporary breather at current levels over few sessions. Post this we expect Nifty to resume uptrend towards 18100 in coming weeks with key support now being placed at 17500 levels. Use dips as buying opportunity amid onset of earnings season. Our positive view on the market is further validated by following observations:

*a) For the first time since December 2022, index posted faster recovery of last declining segment. Nifty recovered 15 session decline (18100-16800) in just eight sessions indicating structural improvement

*b) 55% of the Nifty500 constituents are above 50-day moving average this week, Strongest reading since December 2022

*c) FII inflows have been supportive with US dollar in declining trend. We expect further weakness in dollar to lead continued foreign money flow

*d) India VIX closed below 12 indicating low risk perception of market participants

* We expect broader markets to witness catch up activity as  Nifty midcap and small cap indices have resolved out of four month falling channel indicating end of corrective phase

*Structurally, the formation of higher high-low on the weekly chart makes us confident to revise support base at 17500 as it is 31.8% retracement of three-week rally (16828-17842) coincided with rising 200-day ema (17524)

In the coming session index likely to open on flat to negative note amid soft global cues. We expect the index to consolidate with stock specific action. Hence use intraday dips in Nifty April future towards 17675-17710 for creating long position with a target of 16793, maintain a stoploss at 17639

Nifty Bank: 42262

Technical Outlook

* The daily price action formed a bear candle with a higher high - low signalling continuation of the overall positive bias amid stock specific action

* The index during last week has generated a breakout above last four -month declining channel signals end of corrective phase and opens upside towards 43000 levels in April 2023 being the 80 % retracement of the entire decline (44151 -38613 )

* Index after almost 3100 points up move in just three weeks has approached overbought territory with a reading of 88 raising probability of a temporary breather . However, this should not be constructed as negative instead dips should be used as a buying opportunity

* Key point to highlight is that the index for the first time since December has posted faster retracement of last major declining segment i . e . seven weeks decline (42015 -38613 ) retraced in just three weeks signalling sign of turnaround on larger degree

* Bank Nifty continues to outperform the Nifty . The Bank Nifty/Nifty ratio line continues to trend higher and sustaining above the major breakout area signalling extended period of outperformance

* The index has support at 41200 levels being the confluence of the 61 . 8 % retracement of the last week up move (40727 -42196 ) and rising demand line joining lows of the last three weeks placed at 41200 levels • The weekly stochastic remain in uptrend and is seen sustaining above its three periods average thus supports the overall positive bias in the index

In the coming session, the index is likely to open on a flat to negative note amid soft global cues . We expect Index to consolidate its recent gains amid stock specific action . Hence use intraday dips towards 42130 -42210 for creating long position for the target 42470 , maintain a stoploss of 42010

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