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Nifty: 17525

Technical Outlook

• The index started the truncated week on a buoyant note as intraday dips were bought into throughout the day. As a result, daily price action formed a bull candle carrying higher higherlow, indicating continuance of positive bias

• Going ahead, we maintain our positive stance and expect Nifty to gradually head towards 17900 levels in coming weeks as it is 80% retracement of entire decline off October 2021 to June low (18600-15200). However, the move towards 17900 would be in a non linear manner tracking global volatility. Thus, any temporary breather from here on should not be construed as negative. Instead dips should be capitalised on as a buying opportunity. Our constructive bias is based on following key observations:

• a) the breakdown in Brent crude oil prices below $98 boosts sentiment and should help to tone down inflation worries, which is positive for equities

• b) market breadth as measured by percentage of stocks rising above 50 day average has seen remarkable improvement, with current reading of 82% against mid-July reading of 44% indicating broadening participation across sectors, market caps

• C) Within emerging market space Indian equities have relatively outperformed MSCI EM basket significantly. With FII turning net buyers in Indian equities over past couple of weeks, we expect this outperformance to further enhance

• Structurally, the formation of higher high-low underpinned by broader market participation makes us confident to revise support base at 17100 as it is 38.2% retracement of most recent rally (16438-17548) coincided with the last week’s low of 17155

• The midcap index has relatively outperformed against benchmark supported by improving market breadth, indicating broad based nature of rally. Going ahead, we expect catch up activity should be seen in small cap space.

• In the coming session, index is likely to open on a flat to negative note tracking soft global cues. We expect the index to trade with a positive bias while maintaining higher high-low and sustaining above 17400 levels. Hence, use intraday dip towards 17440-17472 for creating long position for the target of 17558

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 38237

• The daily price action formed a bull candle with a higher high as the index continued with its positive momentum . In the process index closed firmly above the 38000 levels .

• We expect the index to maintain positive bias and head towards February 2022 high of 39400 levels in the coming weeks . Any temporary breather in the on going truncated week should not be construed as negative instead should be used as a buying opportunity

• Index after a sharp rally of 19 % in the just seven weeks has approached overbought condition in the weekly stochastic oscillator (currently placed at a reading of 95 ) indicating possibility of temporary breather at higher levels cannot be ruled out . We believe any retracement of the recent up move from here on would make the market healthy and provides incremental buying opportunity

• Bank Nifty has relatively outperformed the benchmark index during the market correction and the subsequent pullback as can be seen in the Bank Nifty/Nifty ratio chart . It has registered a breakout above the falling supply line joining highs since January 2021 highlighting strength and continuation of the outperformance

• The formation of higher high -low on the weekly chart makes us confident to revise the support base higher towards 36800 levels as it is the confluence of the bullish gap area of 28th July 2022 and the 38 . 2 % retracement of the recent up move (34463 -38231 )

In the coming session, index is likely to open on a flat to negative note amid soft global cues . We expect the index to maintain positive bias while forming higher high -low . Hence , use intraday dips towards 38060 -38140 for creating long position for the target of 37370 , maintain a stoploss at 37940

Nifty Bank Index – Daily Candlestick Chart

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