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Nifty:16930

Technical Outlook

* The index witnessed a gap up opening (16642-16746) above June high and gradually marched northward as intraday dips were bought into. As a result, daily price action formed a sizable bull candle carrying higher high-low, indicating acceleration of upward momentum.

* Over past one month we have observed that rallies are now getting bigger along with shallow correction, indicating structural improvement that makes us confident to upgrade target from 16600 to 17500 in the month of August while 16500 remains strong support which we do not expect to breach as it is confluence of 100 days EMA coincided with 38.2% retracement of past two weeks rally. Hence, dips should be utilised as incremental buying opportunity. Our constructive bias is further validated by following observations:

* A) Since October 2021 peak of 18600, on two occasions post falling channel breakout Nifty has retraced 80% of preceding corrective phase. At current juncture, similar breakout has panned out and we expect Nifty to maintain the same rhythm and head towards 17500 being 80% retracement of two month decline (18100-15200)

* B) Long term sentiment indicator : Since 2008, on six occasions index has formed durable bottom after percentage of stocks above 200 DMA (Nifty 500 universe) has touched the extreme low reading below 15. Subsequent rallies in each of these instances measured minimum 20% from lows

* C) The sharp decline in crude oil prices coupled with industrial commodities and cool off in India VIX highlights improvement in market sentiment that augurs well for extension of ongoing rally

* The Nifty midcap and small cap indices mirrored the move in benchmark and staged a decent pullback after approaching price wise maturity of 25% and 40%, respectively. Key point to highlight is that, the breadth indicator, measured by percentage of stocks above 50 day moving average have jumped from 22% at the beginning of July to current reading of 77% indicating broad based nature of rally that bodes well for durability of ongoing pullback and paves the way for 7-8% up move, respectively

* In the coming session, index is likely to witness gap up opening above psychological mark of 17000 on the back of firm global cues. We expect index to endure its winning streak while maintaining higher high-low. Hence, use intraday dip towards 17090-17122 for creating long position for the target of 17207

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 37378???????

Technical Outlook???????

* The daily price action formed a bull candle with a higher high -low and a bullish gap below its base (36808 -37028 ) signalling acceleration of the upward momentum . The index in the process also closed above the falling supply line joining the highs of October 2021 and April 2022 highlighting strength and extension of the up move .

* The index on Thursday session has almost tested our immediate target of 37500 . The overall structure remain firmly positive with elongated rallies and smaller decline which gives us confident to revise the target price higher towards 38700 levels in the coming month being the confluence of high of April 2022 and the 61 . 8 % retracement of the last eight months decline (41829 -32155 )

* Bank Nifty has relatively outperformed the benchmark index during the market correction and the subsequent pullback as can be seen in the Bank Nifty/Nifty ratio chart . It has registered a breakout above the falling supply line joining highs since January 2021 highlighting strength and continuation of the outperformance

* Bouts of volatility on account of the volatile global cues cannot be ruled out . However, only a decisive close below Thursday’s gap area (36808 -37028 ) would lead to a breather, else continuation of upward momentum . However, temporary breather from hereon should not be construed as negative instead dips should be capitalised as incremental buying opportunity

* The formation of higher high -low on the weekly chart makes us confident to revise the support base higher towards 36000 levels as it is the confluence of the recent breakout area and the 50 % retracement of the current up move (34463 -37414 ) In the coming session, index is likely to open gap up amid firm global cues . We expect the index to trade with positive bias after second consecutive gap up opening highlighting acceleration of the upward momentum . Hence, after a positive opening use intraday dips towards 37490 -37570 for creating long position for the target of 37830 , maintain a stoploss at 37380.

Nifty Bank Index – Weekly Candlestick Chart

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