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NSE (Nifty): 18109

Technical Outlook

* The Nifty started Monday’s session on a positive note and approached the upper band of consolidation placed at 18200. However, profit booking form higher levels dragged index below 18100 mark. As a result, daily price action formed a bear candle with sizable upper shadow carrying higher high, indicating breather at higher levels amid stock specific action. In the process, index retraced 61.8% of October decline (18604-17613)

* The absence of faster pace of retracement on either side indicates extended consolidation in the range of 18200-17700 range which would offer incremental buying opportunity as index approaches price/time wise maturity of correction. Key point to highlight over past 18 months is that, price-wise Nifty has maintained the rhythm of not correcting for more than 7-9% while sustaining above 50 days EMA and time-wise intermediate corrections have got arrested within four weeks. As index has already corrected 5.5% over past three weeks, we expect index to hold 17500 and eventually challenge upper band of consolidation at 18200. Hence, dips should be capitalised on to accumulate quality stocks

* The broader market indices showing resilience by forming a base above 50 days EMA that has been held since June 2020, highlighting robust price structure. We expect Nifty midcap and small cap indices to extend their consolidation and witness stock specific action

* Structurally, the higher base formation above 50 days EMA signifies robust price structure that makes us believe that ongoing breather would find its feet around 17500-17600 range as it is confluence of: a) 50 days EMA at 17650 b) October 2021 low is placed at 17452.

In the coming session, the index is likely to open on a positive note tracking positive Asian cues. We expect, index to trade with a positive bias while sustaining above intraday support of 18050. Hence, use dip towards 18110-18145 for creating long position for target of 18227

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 38702

Technical Outlook

* The daily price action formed a small bear candle with a higher high -low signaling continuation of the consolidation around the vicinity of the 50 days EMA placed around 38405 levels

* Key observation is that the index since April 2020 has not corrected for more than four weeks barring one instance while 50 days EMA has acted as strong support during each of the corrective phase . In the current scenario with three weeks of decline already behind us, we expect the index to maintain the rhythm and form a higher base around 50 days EMA (currently placed around 38405 )

* In the ongoing truncated week, we expect index to continue with its healthy consolidation in the broad range of 38200 - 40000

* We believe the current breather should not be seen as negative instead it should be capitalized to accumulate quality banking stocks for the next leg of up move . Buying on dips strategy has worked well on multiple occasions in the last 18 months

* The short term support base for the index is placed at 38200 - 38400 levels being the confluence of :

* 61 . 8 % retracement of the recent up move (36876 -41829 ) placed at 38620 levels

* the upper band of the recent seven months range breakout area

* the rising 50 days EMA is also placed at 38405 levels

* In the coming session, index is likely to open on a positive note amid firm Asian cues . We expect, the index to continue with its last two sessions pullback from the crucial support area of 50 days EMA . Hence after a positive opening use intraday dips towards 38710 -38780 for creating long position for the target of 39040 , maintain a stoploss of 38590.

Nifty Bank Index – Weekly Candlestick Chart

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