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Nifty : 19571

Technical Outlook

* Nifty started the session on a subdued note. However, buying demand from 50% retracement level of 19500 helped index to recoup Intraday losses and settle the session near days high. The daily price action formed a bull candle with long lower shadow, highlighting buying demand at elevated support base.

* Going ahead, we expect index to prolong the ongoing consolidation in the broader range of 19900-19200. The slower pace of retracement makes us believe stock specific action will prevail amid progression of ongoing earning season. The past two week’s breather has helped index to cool off the overbought conditions and make market healthy. Thus, buying dips would be rewarding at current juncture amid progression of ongoing earning season.

* The midcap index has clocked a fresh All time high, highlighting resilience despite profit booking in the benchmark. However, past five months remarkable >30% rally hauled weekly stochastic oscillator in overbought territory while breadth indicator (% of stocks above 200 DMA) has approached overbought condition (placed at 91), suggesting possibility of temporary breather at higher levels can not be ruled out. Thus, focus on accumulating quality stocks in a staggered manner.

* We believe, any extended breather from hereon would get anchored around key support of 19200 as it is confluence of:

* a) 61.8% retracement of current up move (18645-19991), at 19160 • b) 50 days EMA is placed at 19222 • c) July month’s low is placed at 19234

 Bank Nifty

Technical Outlook

* The Nifty Bank Inde x made decent recovery in second half ahead of Thursday’s RBI policy meet outcome . Day’s price action resulted in a hammer like candle indicating supportive buying demand in the vicinity of 50 -day ema for three out of past five sessions .

* Nifty Bank index is undergoing a corrective phase over past two weeks after strong 20 % rally from March lows which will help index to form a higher base and make the medium term uptrend healthy . Use dips as buying opportunity

* Going forward, we expect 45500 to act as immediate hurdle in coming week ahead of RBI policy and inflation numbers while only a decisive breach below 44500 may lead to panic reaction towards 43800 in the short term which will present buying opportunity

* PSU banking space is expected to continue relative outperformance

* In the current week, inflation numbers and RBI policy outcome would set the tone for further directional bias

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