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Nifty to gradually head towards 17600…

Technical Outlook

* In line with our view, buying demand emerged after approaching maturity of price-time correction that helped Nifty to resolve out of intermediate resistance of 17250. The weekly price action formed a bull candle carrying higher high-low, indicating resumption of up trend. In the process, index has resolved out of downward sloping channel, indicating rejuvenation of upward momentum

* The improving market breadth supported by multi sector participation makes us believe index would extend ongoing up move towards 17600 levels in coming weeks. In the process, bouts of volatility cannot be ruled out. However, any dip from hereon should not be construed as negative instead capitalise it as incremental buying opportunity as we expect strong buying demand exists around 17000-17800 zone. Our earmarked target of 17600 is based on following observations:

* A) price parity of last weeks up move (16410-17155), projected from current week’s low of 16833, is placed at 17605

* B) December 2021 high is placed at 17639

* Amongst Sectors, IT, Capital goods, Textiles are expected to endure relative outperformance while, BFSI, Metal, Infra and Auto are placed with favourable risk-reward setup

* In large cap space we like, TCS, HCL Tech, Titan, Sun Pharma, Ultratech Cement, Larsen & Toubro, DLF. while in midcap space we prefer Bharat Electronics, Vardhman Textiles, Zensar Technologies, Fortis Healthcare, National Aluminium, Gaberial India, SKF India, Sanghavi Movers, Canara Bank, Gokaldas Exports

* Key point to highlight is that the Nifty midcap, small cap indices have formed a higher base above 100 days EMA which has been majorly held since June 2020 that makes us confident that broader market would endure its relative outperformance in coming weeks

* Structurally, index has bounced back after approaching maturity of price-time wise correction. Price wise, the index has maintained the rhythm of not correcting for more than 11% since May 2020. Time wise, the index has arrested secondary correction within nine weeks. In the current scenario, the index has bounced after correcting 11.8% over the past nine weeks. Therefore, we believe any intermediate correction from here on would find its feet around 16800 as it is 61.8% retracement of current pullback (16410-17400) placed at 16788 coincided with last week’s low of 16833

* In the coming session, the index is likely to open on a flat note amid muted global cues. We expect index to consolidate amid stock specific action. Hence use intraday dip towards 17345-17372 for creating long position for target of 17459

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35481

Technical Outlook

* The The weekly price action formed a bullish engulfing candle as it encompassed last week’s real body and closed at the immediate hurdle of 35500 levels

* Going ahead, we expect the index to gradually extend the current pullback towards 37000 levels in the coming weeks as it is the 80 % retracement of the immediate previous decline (37581 -34018 ) .

* In the process, bouts of volatility cannot be ruled out . However, any dip from hereon should not be construed as negative instead capitalise it as incremental buying opportunity as we expect strong buying demand exists around 34800 -34500 levels .

* On expected lines buying demand emerged after approaching maturity of price -time correction . As a result, index maintained rhythm of not correcting for more than 20 % price wise and 9 weeks’ time wise, since May 2020 .

* Immediate support is placed around 34800 -34500 levels being the confluence of :

* (a) the rising demand line joining lows of the last two weeks

* (b) the rising 52 weeks EMA currently placed at 34717 levels

* Among the oscillators the weekly stochastic is rebounding from the oversold territory and is placed at a reading of 23 , thus supports pullback in the index in the coming weeks

* In the coming session, index is likely to open on a flat note amid muted global cues . We expect the index to consolidate with positive bias . Hence use intraday dips towards 35450 -35520 for creating long position for the target of 35780 , maintain a stoploss at 35330

Nifty Bank Index – weekly Candlestick Chart

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