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Nifty: 15832

Technical Outlook

• The index started the week with a positive gap (15700-15926) and subsequently traded in a 100-point range. The daily price action formed a small bear candle carrying positive gap below it, highlighting continuance of positive momentum

• The formation of higher high-low on the weekly chart signifies resumption of positive bias that makes us believe the index will gradually extend ongoing pullback towards 16200 levels in coming weeks as it is 61.8% retracement of June decline (16794-15183) coincided with upper band of negative gap recorded on June 13 (16201-15878). However, move towards 16200 would not be in a linear pattern as bouts of volatility owing to monthly expiry and global developments can not be ruled out. Thus, any dip from here on should be used as buying opportunity as immediate support for the Nifty is placed at 15200 being past two week’s identical low

• The sentiment indicators are approaching their bearish extremes. Historically, reading of percentage of stock above 200 DMA below 15 signifies extreme pessimism in the markets that eventually leads to a technical pullback in subsequent weeks. Currently index bounced after recording bearish extreme of 12 (which is lowest since March 2020) suggesting a strong possibility of a technical pullback in following weeks

• The broader market indices have bounced after forming hammer like candle on the weekly chart. In three instances over the past decade, intermediate correction in the Nifty Midcap, Small cap indices have been to the tune of 28% and 40%, respectively. At present, both indices have bounced after correcting 25% and 34%, respectively. Therefore, 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 subdued note tracking muted global cues. We expect, index to stage a pullback from lower band of Monday’s positive gap area (15700-15926). Hence, use intraday dip towards 15690-15722 for creating long position for the target of 15807

NSE Nifty Daily Candlestick Chart

Nifty Bank: 33811

Technical Outlook

• The daily price action formed a bear candle as it opened higher however profit booking at higher levels after last weeks up move saw the index gave up some its gains to close around 33800 levels .

• Going ahead, we expect the Banking index to gradually resolve higher and head towards 34500 levels in coming weeks which is higher band of bearish gap area of 13th June 2022 (34483 ) and 61 . 8 % retracement of preceding three week decline (36083 -32290 )

• In coming expiry week, volatility is likely to remain elevated wherein buying demand is expected to emerge around 32800 levels . Hence any dips in coming week towards 33000 -32800 may be used as buying opportunity

• The index has key immediate support around 32100 -32300 levels as it is the last two week’s almost identical lows which also confluence with the March 2022 lows placed at 32155 levels

• Amongst momentum oscillators, weekly RSI has formed a positive divergence with last week reading of 38 against May 2022 reading of 37 while price made new low . Such divergence is indicating receding downward momentum and likely to trigger further technical pullback in coming weeks

In the coming session, index is likely to open on a soft note amid weak global cues . We expect the index to trade in a range with positive bias . Hence use intraday dips towards 33320 - 33400 for creating long position for the target of 33670 , maintain a stoploss at 33210

Nifty Bank Index – Weekly Candlestick Chart

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