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Nifty: 17769

Technical Outlook

* The index started the session on a positive note and on expected lines approached upper band of consolidation placed at 17800. As a result, daily price formed a high wave candle carrying small bull candle with shadows on either side, indicating continuance of positive bias amid elevated volatility.

* Going ahead, a decisive close above 17800 would signal end of ongoing corrective phase and open further upside towards 18100 in coming weeks. Failure to sustain above 17800, would lead to prolongation of consolidation in the 17800-17500 with stock specific action amid advancement of Q4 earning season

* Structurally, the index has pulled back after witnessing slower pace of retracement wherein the index retraced its nine session’s rally (16913-17863) by just 30% over past seven sessions, 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 would provide incremental buying opportunity

* Our positive view is further validated by following observations:

a) for the first time since December 2022, the index posted a faster recovery of the last declining segment. The Nifty recovered its 15 session’s decline (17800-16800) in just nine sessions indicating a structural improvement

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

c) FII inflows have been supportive with the 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 maintain 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 is likely to open on a muted note tracking subdued global cues. After initial blip, we expect index stage a pullback and trade with a positive bias. Hence, use intraday pullback in April future towards 17680-17715 to create intraday long positions for target of 17798 with a stoploss of 17643

Nifty Bank: 42678

Technical Outlook

* The daily price action formed a small bear candle with shadows in either direction with a higher high -low signalling consolidation with positive bias

* Going ahead, we expect the index to extend the up move and gradually head towards 43000 levels in the coming sessions being the 80 % retracement of the entire decline (44151 -38613 )

* The index has seen a strong up move of almost 3500 points in the last four weeks which has lead to weekly stochastic approaching overbought territory with a reading of 94 . Hence, a breather at higher levels can not be ruled out which should not be seen as negative instead dips should be used as a buying opportunity

* 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 positive price structure

* 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 - 42865 ) and rising 20 weeks EMA currently placed at 41206 levels

In the coming session, the index is likely to open on a soft note amid weak global cues . We expect Index to consolidate with stock specific action . Hence use intraday dips towards 42450 - 42530 for creating long position for the target 42770 , maintain a stoploss of 42340

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