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Nifty holding June lows of 15200 would keep pullback options open towards 16200…

Technical Outlook

• The index remained volatile during monthly expiry week. After initial blip, Friday’s 300 points strong recovery from 15500 zone helped the index to recoup intra-week losses. As a result, daily price action formed a hammer like candle carrying small bull candle with long lower shadow around 50% retracement of last week’s up move, highlighting turnaround in sentiment. Consequently, our buy on dips strategy fared well

• The formation of higher high-low on the weekly chart signifies continuance of positive bias. Going forward, holding June lows of 15200 would keep pullback options open towards 16200 in a gradual manner in coming weeks as it is confluence of:

• a) 61.8% retracement of June decline (16794-15183)

• b) upper band of negative gap recorded on June 13 (16201-15878) • Key point to highlight is that, over past four sessions index retraced merely 50% of preceding five sessions up move. The slower pace of retracement signifies buying demand emerged at elevated support base. Thus buying dips amid global volatility would be the prudent strategy as we believe strong support for the Nifty is placed at 15200

• Going forward, traction in Brent Crude Oil prices will be key monitorable as it has snapped past six month winning streak. A decisive close below 107 would lead Brent prices towards 100, which could fuel upward momentum in equities

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

• We prefer SBI, Infosys, ITC, Hindustan Unilever, Divis Laboratories, ABB, Maruti Suzuki, in large caps while in midcaps we prefer Ashok Leyland, Blue Dart Express, Federal Bank, Minda Industries, MM Forgings, Dr Lal Pathlabs, Granules, Havells India, Trent, Phoenix Mills

• The broader market indices mirrored the benchmark move during the week and extended breather wherein Nifty midcap, smallcap indices have been sustaining above last week’s hammer like candle. 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 mixed global cues. We expect, index to stage recovery after initial decline and trade with a positive bias. Hence, use intraday dip towards 15660-15692 for creating long position for the target of 15778

NSE Nifty Daily Candlestick Chart

Nifty Bank: 33539

Technical Outlook

• The weekly price action formed a bear candle with a long lower shallow as the index opened higher but failed to sustain at higher levels and gave up its gains . However, buying demand at lower levels around the 33000 levels saw the index recover its intraweek decline and close on a flat note

• Going ahead, we expect the index to gradually head towards 34500 levels in the coming weeks as it is the higher band of bearish gap area of 13th June 2022 and the 61 . 8 % retracement of the decline of June 2022 (36083 -32290 ) . Hence use dips towards 32600 -33000 levels being the 80 % retracement of the recent up move (32291 -34147 ) as an incremental buying opportunity

• In a smaller time frame the index has already taken five sessions to retrace just 61 . 8 % of its preceding six sessions up move (32291 -34147 ) . A shallow retracement signals a higher base formation

• The index has key immediate support around 32100 levels as it is the almost identical lows March and June 2022 placed around 32155 levels

• Amongst momentum oscillators, weekly RSI has formed a positive divergence with June low 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 flat to negative note amid mixed global cues . Volatility is likely to remain high on account of the volatile global cues . After a soft opening use intraday dips towards 33310 -33380 for creating long position for the target of 33630 , maintain a stoploss at 33190

Nifty Bank Index – Weekly Candlestick Chart

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