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Nifty:16642

Technical Outlook

* The index started the session on a subdued note, however buying demand emerged in the vicinity of 200 days EMA coincided with 38.2% retracement of past six sessions up move. Consequently, daily price action formed a bullish engulfing candle that encompassed Tuesday’s bear candle, indicating resumption of up trend after two sessions breather.

* The index has undergone slower pace of retracement ahead of U.S. Fed meet outcome, as over past three sessions it retraced 38.2% of preceding six sessions sharp up move (15858-16752) highlighting inherent strength. This eventually helped daily stochastic oscillator to cool off the overbought conditions. Going ahead, we expect index to resolve higher and gradually head towards psychological mark of 17000 in coming sessions as it is 61.8% retracement of April-June decline (18114-15183). Thus, any dip from hereon should be capitalised as incremental buying opportunity

* Structurally, the formation of higher high-low supported by improvement in market breadth measured by percentage of stocks above 50 day moving average within Nifty 500 universe, indicating broad based nature of the rally that augurs well for durability of ongoing up move which makes us confident to retain support base upward at 16300 as it is confluence of:

* a) 50% retracement of preceding up move (15858-16752)

* b) as per change of polarity concept past two weeks identical high of 16275 would now act as key support

* In tandem with the benchmark, Nifty midcap regained upward momentum in the vicinity of 200 days EMA. Key point to highlight is that the benchmark index Nifty and midcap index are sustaining above their 200 days EMA, however small cap index is still 8% away from its 200 days EMA. Thus, we expect catch up activity to be seen in the broader market. Hence, focus should be on accumulating quality mid and small caps amid ongoing earning season

* In the coming session, index is likely to open gap up tracking firm global cues. We expect the index to trade with positive bias while maintain higher high-low. Hence, after a positive opening use intraday dip towards 16680-16712 for creating long position for the target of 16797

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 36783

Technical Outlook

* The daily price action formed a bull candle which completely engulfed previous session bear candle signalling buying demand emerging around 36300 -36200 levels being the 23 . 6 % retracement of the last up move (34463 -37011 )

* Going ahead we expect the index to maintain positive bias and head towards 37500 levels in the coming weeks being the 80 % retracement of the previous major decline (38765 -32290 .

* The up move towards 37500 levels is likely to be in a non -liner manner bouts of volatility owing to volatile global cues cannot be ruled out . However, only a decisive close below Wednesday’s low (36248 ) 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

* Key observation in the recent market correction and during the last five -week pullback is that the Bank Nifty is relatively outperforming the Nifty . It is also highlighted in the Bank Nifty/Nifty ratio chart as it is seen breaking above the falling supply line joining highs since January 2021 highlighting strength and continuation of the current outperformance

* The formation of higher high -low on the weekly chart makes us confident to revise the support base higher towards 35400 levels as it is the confluence of the 200 days EMA and the 61 . 8 % retracement of the last up move (34463 -37011 ) In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence, after a positive opening use intraday dips towards 36780 -36860 for creating long position for the target of 37120 , maintain a stoploss at 36670.

Nifty Bank Index – Weekly Candlestick Chart

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