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Nifty 

Technical Outlook

* The Nifty commenced the week on a subdued note led by selling in IT stocks followed by a lacklustre trading action for rest of the week as market turned stock specific. Weekly price action formed Bear candle that engulfed previous week’s gains indicating breather after 1000 points rally. Meanwhile, Midcap space continued its relative outperformance with many beaten down names staging a technical pull back from oversold trajectory

* In the coming week, we expect Nifty to extend its consolidation in 17500-17800 band with stock specific action amid Q4 earnings and weekly expiry. Only sustained move above 17800 would signal end of ongoing corrective phase and open further upsides

* Structurally, index retraced nine session rally (16913-17863) by just 30% over past five sessions indicating slower retracement which is indicative of a healthy consolidation above 200 day ema(17500). We believe that ongoing consolidation would make market healthier and result in a higher base formation which should not be construed negative, rather a buying opportunity

* Our positive view is 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 (17800-16800) in just nine sessions indicating structural improvement

b) Ratio of stocks at 52-week highs vs. 52-week lows has improved significantly over past two weeks which is sign of improved market sentiment. From early April reading of 1:1, ratio is currently at 4:1 with new set of stocks from Pharma

c) FII inflows have been supportive with US dollar in declining trend. In April, FIIs turned net buyers, one of highest among EM basket

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

* Structurally, the slower pace of retracement makes us confident to revise support base at 17500 as it is 38.2% retracement of threeweek rally (16828-17863) coincided with rising 200-day ema (17530)

In the coming session, index to open on a flat to positive note amid mixed global cues. Stock specific action continues to remain in focus amid earnings. While the index consolidates in a range. Overall bias remains positive. Hence, use intraday dips towards 17620-17653 in Nifty April future for creating long position for target of 17739, maintain a stoploss at 17583

Nifty Bank: 42118

Technical Outlook

* The weekly price action formed a bear candle with a long lower shadow signalling consolidation amid stock specific action after strong up move of more than 8 % in the preceding three weeks

* The Index has witnessed breather in the last five sessions after up move of more than 3200 points in the preceding three weeks . Going ahead, we expect the index to extend the current consolidation amid stock specific action . We believe the current breather will make the trend healthy and dips should be used as a buying opportunity for gradual up move towards 43000 levels in the coming weeks being the 80 % retracement of the entire decline (44151 -38613 ) . Support for the Bank Nifty is placed at 41200 levels

* Key point to highlight is that the index has recently for the first time since December 2022 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 38 . 2 % retracement of the current up move (38613 - 42603 ) and rising demand line joining the recent lows of the last four weeks placed at 41200 levels

In the coming session, the index is likely to open on a flat to positive note amid mixed global cues . We expect Index to trade with positive bias while holding above 42000 levels . Hence use intraday dips towards 42080 -42160 for creating long position for the target 42420 , maintain a stoploss of 41960

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