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Nifty: 16478

Technical Outlook

• The index recouped initial losses despite gap down opening (16356-16264) as buying demand emerged from lower band of rising channel (as shown in adjoining chart) amid oversold condition on the daily stochastic oscillator. As a result, the daily price action formed bullish engulfing candle that engulfed Wednesday’s real body, indicating pause in downward momentum

• In today’s session the index is likely to witness a gap down opening tracking weak global cues. We believe strong support for the Nifty is placed at 16100 zone. However, for a meaningful pullback to materialise the index needs to decisively close above past three session’s identical high of 16500 to extend the pullback towards last week’s high of 16800. Else, there will be prolonging of consolidation in the 16500-16100 range amid stock specific action

• Structurally, over past 8 sessions index has retraced 50% of preceding three sessions up move (15904-16695), indicating slower pace of retracement. The lack of faster retracement on either side signifies prolonged consolidation 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 taken a pause after past four sessions decline. For a meaningful pullback to materialise in the broader market, Nifty midcap and small cap indices need to resolve above the upper band of past three weeks range. Else, continuance of range bound activity wherein broader market would relatively underperform the benchmark

In the coming session, index is likely to open with a negative gap tracking weak global cues. We expect corrective bias to remain as long as index maintains lower high-low formation. Hence, after initial decline, pullback towards 16344-16378 should be used for creating short position for the target of 16259

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34946

Technical Outlook

• The daily price action formed a bull candle as the index opened lower but recovered as the session progressed and closed higher above 35000 levels . Buying demand on Thursday session emerged from the 50 % retracement of the previous up move (33180 -36083 ) .

• Going ahead, the index is likely to extend the current breather in the broad range of 34000 -35500 lack of faster retracement in either direction signals extended consolidation .

• On the higher index has stiff resistance is placed at 36100 levels being the confluence of last week high and the 61 . 8 % retracement of the April -May decline (38765 -33002 )

• The index has already taken eight sessions to retrace just 50 % 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 18 , however it continues to remain in downtrend

In the coming session, index is likely to open gap down amid weak global cues . Index is expected to trade with corrective bias in the broad range of 34500 -35000 levels . Hence after a gap down opening use intraday pullback towards 34830 - 34900 for creating short position for the target of 34570 , maintain a stoploss at 35030

Nifty Bank Index – Weekly Candlestick Chart

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