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Nifty: 15990

Technical Outlook

• The index started the session on a positive note and gradually headed towards the 16000 mark. As a result, the index entirely recouped Tuesday’s decline fuelled by sharp decline in crude oil prices, which will eventually help in cooling off the inflation. The daily price action formed a bull candle while maintaining higher low, indicating continuance of positive momentum

• The sharp decline in crude oil process coupled with cool off in India VIX signifies improvement in sentient that makes us believe index will challenge immediate hurdle of 16200 and gradually head towards 16600 in coming months (mentioned in our July Technical strategy) as it is confluence of:

• a) 50% retracement of CY22 decline (18350-15183)

• b) 200 days EMA is placed at 16620

• c) Historically, extreme bearish reading of sentiment indicator (% of stocks above 200 DMA of Nifty 500 Universe) leads to 10% pullback rally in subsequent three months. In the current scenario, 10% will mature at 16700

• The across sector participation supported by improvement in market breadth signifies rejuvenation of upward momentum. Key point to highlight is that, currently 37% of Nifty 500 stocks are trading above 50 days EMA compared to last week’s reading of 22%. The improvement in market breadth bodes well for durability of ongoing pullback. That makes us confident to revise support base at 15500 as it is confluence of:

• a) 61.8% retracement of current pullback (15183-16025)

• b) Last week’s low is placed at 15500

• Formation of higher high-low on the weekly chart signifies buying demand at elevated support base. Both Nifty midcap, small cap index are regaining upward momentum after witnessing slower pace of retracement. Recently both indices retraced merely 38.2% of their prevailing up move. In three instances over the past decade, intermediate correction in the Nifty Midcap, Small cap indices have been to the tune of 28%, 40%, respectively. Currently, both indices have bounced after correcting 25%, 34%, respectively. Hence, base formation from here on would set the stage for a technical pullback in coming weeks

In the coming session, index is likely to open on a positive note tracking frim global cues. We expect, index to trade with a positive bias and gradually head towards 16200. Hence, use intraday dip towards 16010- 16042 for creating long position for the target of 16127

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34324

Technical Outlook

• The daily price action formed a strong bull candle with a higher high -low signaling lack of follow through to previous session decline and continuation of the last two weeks pullback from the extreme oversold territory

• Index is currently at the cusp of generating a breakout above the falling supply line joining the highs of April and June 2022 . A follow through strength above the same will open upside towards the June 2022 high of 36000 in the coming weeks

• The move towards 36000 will not be in a linear manner as bouts of volatility owing to volatile global cues cannot be ruled out . Amidst elevated volatility, we expect buying dips strategy to continue to fare well as we believe strong support for the Nifty is placed at 32100 . Thus, any breather from hereon should be used to accumulate quality banking stocks to ride next leg of up move towards 36000 levels in coming weeks as it is confluence of :

• (a) the high of June 2022 is placed at 36083 levels

• (b) 61.8% retracement of the last 3 months decline (38765 - 32290 ) is also placed around 36200 levels

• The index has key immediate support around 32100 levels as it is the almost identical lows March and June 2022 placed around 32155 levels

• Among the oscillators, the weekly stochastic has generated a buy signal moving above its three periods average thus supports the positive bias in the index In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence after a positive opening use intraday dips towards 34350 -34430 for creating long position for the target of 34690 , maintain a stoploss at 34240

Nifty Bank Index – Weekly Candlestick Chart

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