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Nifty 

Week that was…

Equity benchmarks extended gains over a third week in a row tracking firm global cues. The Nifty ended the week at 17944, up 0.5%. However, broader markets relatively underperformed the benchmarks as Nifty midcap, small cap shed 1% each. Sectorally, IT, metal, PSU remained at the forefront while financials, pharma and realty extended their breather.

Technical Outlook

• On expected lines, the index staged a decent recovery after approaching maturity of price and time wise correction. As a result, the weekly price action formed a small bull candle carrying higher high-low after 10 weeks, indicating conclusion of the corrective bias. Meanwhile, the formation of shadows on either side signifies elevated volatility

• The index logged a resolute breakout from 10 week’s falling channel, indicating resumption of primary up trend. We expect the index to maintain its northbound journey and gradually head towards 18300 in coming weeks as it is 61.8% retracement of the entire correction since January 2023 (18887-17353). Meanwhile, bouts of volatility tracking global cues cannot be ruled out. Thus, a temporary dip from here on should be capitalised on as an incremental buying opportunity. Our positive bias is further validated by following observations:

• a) the advance/decline ratio has improved to 1.2 over the past few sessions against 0.9 in January indicating improving midcap participation

• b) DIIs have been pillars of strength during corrective phase. Now, with FII selling tapering since last week, we expect an acceleration in the uptrend in coming weeks

• c) Indian equities to catch up global markets: The global setup has been positive since the beginning of CY23. Some European indices have hit new lifetime highs while US indices are consolidating after a sharp up move in January. Expect India to catch up

• Sectors like Auto, Oil & Gas, Infra and IT which have remained out of favour over past ~15 months have exhibited strength. The broad based participation along with Banking and Capital gods

• On the stock front, we prefer Reliance Industries, Infosys, Axis Bank, L&T, ONGC, ITC, Maruti Suzuki while in midcaps we prefer ABB, FSL, PFC, KPR Mills, Tejas Network, Trent, Supreme Industries, Midhani • Structurally, formation of higher low signifies elevated buying demand that makes us confident to revise support base upward at 17600 as it is confluence of: a) 61.8% retracement of past three weeks rally 17353- 18134, b) 200 days EMA is placed at 17580

• The broader markets regained upward momentum after forming a higher base above Sept-22 lows. Going ahead, follow through strength above past 3 week’s high would confirm conclusion of corrective bias and open the door for next leg of up move

• In the coming session, index is likely to open on a flat to positive note tracking firm Asian cues. We expect, index to trade with a positive bias amid elevated volatility ahead of weekly expiry week. Thus, intraday dip towards 17880-17912 should be used to create intraday long positions for target of 17997

Nifty Bank: 41131

Technical Outlook

Day that was

The Bank Nifty continue to trade with high volatility as it oscillated in a 1000 points range and closed the week lower by 1%. Both PSU and private banking stocks traded with corrective bias . The Bank Nifty closed the session at 41131 levels down by 1 % on weekly basis

Technical Outlook

• The weekly price action formed a bear candle with a higher high and lower low on weekly chart highlighting intraweek volatility and range bound trade

• Lack of faster retracement in either direction signal continuation of the consolidation in the broad range of 42000 -40000 . Index has strong support around 40000 levels which we expect to hold . Strength and a close above the upper band of the range which also coincides with the Budget Day high (42015 ) will lead to extended pullback in the coming weeks

• Key point to highlight is that the index pricewise has remained resilient in the current corrective decline . While timewise since CY20 (Covid lows) intermediate corrections have lasted for 9 -11 weeks in a row . In the current scenario the index has already witnessed 10 weeks of corrective decline retracing 65 % of its preceding 10 weeks rally of October –December (37387 -44151 ) . The maturity of timewise correction and pricewise resilience makes us believe the stage has been set to resolve out of upper band of ongoing consolidation in the coming weeks

• Structurally, slower pace of retracement signifies strength that makes us believe any extended correction from here on will find strong support around 40000 levels being the confluence of : (a) 80 % retracement of the recent pullback (39420 -41979 ) at 40030 levels (b) the presence of long term 200 days EMA is also placed at 39990

• The weekly stochastic is seen rebounding from the oversold territory and has recently generated a buy signal placed at a reading of 46 , thus supports pullback in the index in the coming weeks

• In the coming session, the index is likely to open on a flat note amid mixed global cues . Index to continue with its consolidation amid stock specific action . Hence use intraday dips towards 40880 -40960 for creating long position for the target of 41230 with a stoploss of 40770

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