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Nifty : 16661

Technical Outlook

• The index witnessed a volatile session as after a positive opening index pared initial gains and breached Tuesday’s low (16522). However, supportive efforts in the fag end of the session helped index to trim intraday losses. As a result, daily price action formed a small bear candle carrying lower high-low with shadows on either side, indicating extended breather amid rise in volatility. • Going ahead, we expect index to undergo healthy retracement of past three sessions sharp up move (15903-16695) amid stock specific action. Over past two sessions, index has retraced less than 38.2% of preceding 3 sessions rally, indicating shallow retracement. The shallow retracement signifies inherent strength that augurs well for extension of pullback towards 16800 in coming sessions. We believe, bouts of volatility owing to global uncertainty would offer incremental buying opportunity. Thus extended breather should be capitaslied to accumulate quality stocks to ride extended pullback towards 16800 as it is confluence of:

• a) 200 day’s EMA placed at 16750

• b) 50% retracement of the entire April-May decline (18115-15735)

• The Nifty is sustaining above its three weeks range breakout area of 16400 while forming a higher high-low on the weekly chart. The current up move is backed by improving market breadth that bodes well for durability of ongoing up move. The rejuvenating market sentiment makes us confident to retain support base at 16100 as it is 61.8% retracement of current up move (15735-16695)

• Broader market indices extended their pullback and approached upper band of past three weeks range. Going ahead, a decisive close above Wednesday’s high would confirm three weeks range breakout that would open the door for extension of pullback in Nifty midcap and small cap indices. Failure to do so would lead to prolongation of range bound activity wherein broader market would undergo a base formation

• In the coming session, index is likely to open on a subdued opening tracking weak global cues. We expect index to consolidate amid elevated volatility owing to weekly derivative expiry. Hence, use intraday dip towards 16385-16415 for creating long for target of 16497

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35827

Technical Outlook

• The daily price action formed a small bull candle which mostly remained contained inside previous session high -low range signaling consolidation for the second consecutive session after a sharp up move of almost 3000 points in just seven sessions .

• Going ahead, we expect the index to continue with its last two sessions consolidation and form a higher base around the 35000 levels . However, the current breather should not be considered as negative instead dips towards 34500 -34800 should be used as a buying opportunity for gradual up move towards 36500 levels in the coming weeks being the 61 . 8 % retracement of the April -May decline (38765 -33002 )

• Key observation in the recent market correction is that Bank Nifty is relatively outperforming the Nifty and the Bank Nifty/Nifty ratio chart is seen reversing from last 15 months falling channel highlighting strength and continuation of the current outperformance

• The index has formed a higher high -low on the weekly time frame which make us confident to revise the key support base higher towards 34000 levels as it is the confluence of :

• (a ) 61 . 8 % retracement of the current up move (33002 -36083 ) placed at 34100

• (b) Last week low is also placed at 34116 levels

• Among the oscillators the daily stochastic is seen cooling off from the overbought territory and is currently placed at a reading of 76 , thus signaling continuation of the range bound trend for the coming couple of sessions

In the coming session, index is likely to open on a negative note amid weak global cues . We expect it to trade in a range while holding above the support area of 35000 -35200 . Hence use intraday dips towards 35190 -35270 for creating long position for the target of 35530 , maintain a stoploss at 35080

Nifty Bank Index – Weekly Candlestick Chart

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