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NSE (Nifty): 15752

Technical Outlook

* The daily price action formed a bull candle with small lower shadow carrying higher high-low, indicating continuance of positive bias as intraday dips were short lived and subsequently bought into. In the process, Nifty midcap and small cap scaled to fresh 52 weeks high, highlighting broad based participation

* The elevated buying demand backed by improving market breadth displays inherent strength that augurs well for index to resolve higher and eventually extend the rally towards our revised target of 16100 in June 2021. We believe revived traction in BFSI, IT, auto, consumption and infra would drive index higher as it cumulatively contributes more than 60% weightage in the benchmark. Our earmarked target of 16100 is based on following observations: a) Price parity of post budget rally (13597-15432), projected from April low of 14151, at 16055 b) Past two months consolidation (15140- 14150) breakout target at 16120

* We believe the move toward 16100 would not be linear as bouts of volatility owing to overbought condition of daily and weekly stochastic oscillator (at 93 and 97, respectively) cannot be ruled out. However, temporary breather from here on should not be construed as negative. Instead, dips should be capitalised on as incremental buying opportunity as we do not expect the index to breach the key support of 15200 levels

* On expected lines, broader market indices relatively outperformed the benchmark as Nifty midcap and small cap indices scaled to a fresh 52 weeks high. The outperformance in the broader market indices has been backed by improving market breadth as currently 89% of index components are trading above their 50 days EMA compared to April reading of ~60%. We expect, small cap index to challenge the all-time high

* Structurally, the formation of higher high-low backed by rejuvenation of market breadth signifies inherent strength that makes us confident to retain support base at 15200 as it is confluence of: a) 61.8% retracement of past three week’s rally (14885-15773), at 15224 b) past two week’s low is placed at 15145 In the coming session, we expect Nifty futures to trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip towards 15720-15747 to create long for target of 15830

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35443

Technical Outlook

* The daily price action formed a high wave candle which remained contained inside Friday’s price range signalling consolidation with positive bias .

* Going forward, we expect the index to maintain positive bias and head towards our target of 36200 in coming weeks as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708 -30405 ) and the price parity with previous up move (30405 -34287 ) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* Key observation is that the index has gained for third consecutive week for the first time in the entire corrective decline of the last three months highlighting improving price structure

* The index has witnessed a sharp rally of more than 11 % in just 16 sessions, which has led to weakly stochastic at overbought territory with a reading of 90 . Hence, a temporary breather at higher levels cannot be ruled out . However, we believe such a breather should not be seen as negative instead it should be capitalised to accumulate quality banking stocks for up move towards 36200 in the coming weeks

* The formation of higher high -low on the weekly chart signifies elevated buying demand that makes us confident to revise the support base higher towards 34400 -34000 levels as it is confluence of the (a) 38 . 2 % retracement of the current up move (32115 -35810 ) placed at 34400 (b the recent breakout area and the April high (34287 ) (c) The rising 50 days EMA placed at 33900 levels

* In the coming session, the index is likely to open on a flat to positive note amid mixed global cues . We expect the index to trade with positive bias Hence, use intraday dips towards 35480 -35540 for creating long position for the target of 35790 , maintain a stoploss of 35360

Nifty Bank Index – Weekly Candlestick Chart

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