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Buy on dips strategy should be adopted…

Technical Outlook

• In line with our view, Nifty resolved higher and surpassed our intermediate target of 16200 on the backdrop of sharp decline in crude oil prices and India VIX that supported bullish sentiment. The index started the week on a positive note and endured its upward momentum during the week, despite global volatility. As a result, weekly price action formed a bull candle carrying higher high-low, indicating continuance of positive momentum

• Going ahead, we reiterate our positive stance and expect Nifty to gradually head towards 200 DMA placed at 16600 in coming weeks. In the process, intraweek dips towards 15800-15700 should be used as incremental buying opportunity as we believe strong support for the Nifty is placed at July low of 15500. Our constructive stance on the Nifty is based on following observation: a) the index has logged a resolute breakout from downward sloping trend line (drawn adjoining April-June highs), indicating conclusion of two months corrective phase b) current pullback is qualitatively better as compared with earlier pull backs since April in terms of market breadth (measured by percentage of stocks above 50 DMA (51%) strongest in two months indicating broad based participation) c) our target of 16600 is based on 50% retracement of CY22 decline (18350-15183) coincided with 200 days EMA

• Amongst sectors, BFSI, IT, Auto, Consumption and capital goods are preferred while Pharma to witness stock specific action

• We prefer SBI, HDFC bank, Infosys, Tata Motors, DLF, L&T, Titan in large caps while in midcaps we prefer ABB, SKF , Persistent, Apollo Tyres, M&M Finance, Bajaj Electricals, Phoenix Mills, CCL Products, Indian Hotels, Kansai Nerolac

• The broader market indices mirrored benchmark move and formed a higher high-low over second consecutive week signifying buying demand at elevated support base. Both Nifty midcap, small cap index are regaining upward momentum after witnessing slower pace of retracement of mid- June up move. We expect broader market to endure their pullback from oversold zone in coming weeks. Thus, dips should be capitaslied to accumulate quality stocks.

• In the coming session, index is likely to open on a subdued note tracking muted Asian cues. Past three weeks up move hauled daily stochastic in overbought territory at 94, indicating possibility of temporary breather can not be ruled out. Hence, use intraday dip towards 16060-16092 for creating long position for the target of 16178

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35124

Technical Outlook

• The weekly price action formed a strong bull candle with a higher high -low signaling continuation of the up move . The index in the process has generated a breakout above the falling supply line joining the highs of April 2022 and June 2022 indicating end of the last three -month corrective phase

• Going ahead, we expect the index to maintain positive bias and gradually head towards 36000 levels in the coming weeks as it is the 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

• Key observation in the recent market correction and during the last three -week pullback is that the Bank Nifty is relatively outperforming the Nifty . It is also highlighted in the Bank Nifty/Nifty ratio chart as it is seen breaking above the falling supply line joining recent highs highlighting strength and continuation of the current outperformance

• 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 . Use intraweek dips towards 33800 -34000 as an incremental buying opportunity in quality banking stocks

• The formation of higher high -low in the weekly time fame make us confident to revise the support base higher towards 33500 levels as it is the confluence of the last week low and the 61 . 8 % retracement of the current up move (32290 -35262 ) Among the oscillators, the weekly stochastic has recently 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 soft note amid weak Asian cues . We expect the index to trade in a range while holding above 34600 levels . Hence after a negative opening use intraday dips towards 34710 -34770 for creating long position for the target of 35040 , maintain a stoploss at 34590

Nifty Bank Index – Weekly Candlestick Chart

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