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Nifty

• The index started the session a positive note and gradually inched upward as intraday dips were bought into. As a result, the daily price action resembles a bullish engulfing candlestick pattern as the index engulfed Friday’s sizable bear candle, indicating a pause in downward momentum. In the process, daily volume remained low with NSE cash turnover of |46500 compared to 20 days average turnover of |56000

• Going ahead, follow through strength above Monday’s high of 18084 would open the door for extension of the ongoing pullback towards 18300. We expect the index to form a higher base and pave the way for the next leg of the up move. Key point to highlight is that since June 2022 lows, price wise the index has not corrected for more than 8% and time wise decline has not extended for more than three consecutive weeks. In the current scenario, we expect the index to maintain the same rhythm as it has already corrected 6% over the past three weeks, which hauled the daily and weekly stochastic oscillator to the oversold territory (daily, weekly stochastic is placed at 18, 13, respectively), indicating possibility of extension of the pullback. Thus, bouts of volatility owing to monthly expiry should not be construed as negative. Instead, dips should be used as incremental buying opportunity. The immediate resistance for the Nifty is placed at 18300 as it is 50% retracement of past three weeks’ decline (18887-17816) coincided with 20 days EMA placed at 18314

• Mirroring the benchmark’s move, the broader market indices have shown strength that resulted into a strong recovery post Friday’s panic sell-off and both indices engulfed Friday’s decline, indicating inherent strength. Going ahead, we expect the index to undergo healthy consolidation and form a higher base

• We believe, strong support fro the Nifty is placed at 17500 where extended correction would find its feet as it is confluence of: a) 61.8% retracement of October-December rally 16748-18887 is placed at 17565 b) 200 days EMA is placed at 17428 c) Price parity of September 2022 decline (18096 – 16747) projected from all time high of 18887 is placed at 17480

• In the coming session, index is likely open on a positive note. The follow through strength above Monday’s high would lead to extended pullback. Thus, intraday dip towards 17950-17982 should be used to create intraday long positions for target of 18066

Nifty Bank

• The daily price action formed a bullish engulfing candle as it completely engulfed its Friday’s price action signalling buying demand emerging from the oversold territory . The index in the process managed to close above the 50 days EMA (Currently placed at 42154 ) . A follow through strength and a close above 43000 levels will signal extension of the up move in the coming sessions

• Going ahead the index is expected to consolidate in the range 41600 -43000 thus forming a higher base . A Follow through strength above 43000 will open further up side

• On the higher side 43000 would act as key hurdle in coming sessions being the confluence of the 20 days EMA and the 50 % retracement of the current breather (44151 -41598 )

• The daily stochastic has rebounded from the oversold territory and has generated a buy signal moving above its three periods average while the weekly stochastic seen consolidating around the neutral reading of 40 signalling consolidation with positive bias likely in coming sessions

• The Bank Nifty has key support at 40700 mark being the confluence of the (a) 50 % retracement of the last 10 week’s rally (37387 -44151 ) placed at 40760 (b) the rising 20 weeks EMA is also currently placed at 40850 levels which has acted as strong support in the up move since June 2022 .

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