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Nifty :18600

Technical Outlook

• On expected lines, the index resolved higher and surpassed past two month’s high of 18200. As a result, weekly price action formed a bull candle carrying higher high-low, signifying acceleration of upward momentum. In the process, the small cap index scaled a fresh all-time high after October 2021

• The elongation of rallies backed by multi sector participation and improving market breadth signifies inherent strength that makes us confident of reiterating our positive stance and expect the Nifty to retest life-time high of 18600 in the run up to Union Budget 2022. Therefore, any dip from here on would offer an incremental buying opportunity as we do not expect the Nifty to breach 17800 in coming weeks

• Key point to highlight on the broader market front is that, Nifty small cap index has witnessed a faster pace of retracement as it entirely retraced past 10 weeks corrective phase in just three weeks, indicating structural improvement. Also the market breadth has seen significant improvement as 74% of Nifty 500 constituents are trading above 50 days EMA compared to mid-December reading of 49%, that augurs well for durability of ongoing up move. Thereby we expect broader market to endure their relative outperformance in coming weeks.

• We expect BFSI, PSU, Infra and Capital goods to outperform, while Metals & Auto are poised with favourable risk-reward

• In large caps we like Reliance, Infosys, SBI, Bajaj Finserv, Siemens, JSW Steel, Tata Motors, Ambuja Cement while in Midcaps we prefer Canara Bank, Deepak Nitrite, Vardhman Textiles, Bharat Electronics, PNC Infra, India Cement, NMDC, Granules, Sobha Developers, Pricol Ltd

• Structurally, the formation of higher peak and trough on the weekly and monthly chart signifies elevated buying demand, that makes us confident to revise support base in the range of 17800 as it is confluence of: a) 80% retracement of current up move (17655- 18272), placed at 17778 b) current week’s low is placed at17879

• In the coming session, the index is likely to open on a negative note tracking mixed global cues. We expect the index to hold Friday’s low (18146) and stage a pullback post initial blip. Hence use intraday dip towards 18188-18213 for creating long position for target of 18302

NSE Nifty Daily Candlestick Chart

Nifty Bank: 38370

Technical Outlook

• The price action during the week resulted in a small Bull candle with small upper shadow indicating a breather or minor profit booking after massive 4100 points gain registered in just 10 trading sessions, which pushed the momentum oscillator like stochastics in overbought trajectory and warranted some temporary breather .

• Going forward, our structural positive stance on BankNifty remains intact with next target of 40000 expected in the run -up to the Union Budget 2022 , which is the 80 % retracement of the entire decline (41829 -34018 )

• Index has resumed its uptrend after 20 % correction, as anxiety around impact of third covid wave subsided . Therefore, any breather in coming week should not be construed negative rather would offer incremental buying opportunity as we enter the Q 3 earnings season . Buying the decline strategy should work well in coming earnings season as we expect BankNifty index to hold strong support of 37500 levels being the confluence of the following technical observations :

• (a) 23 . 6 % retracement of the current up move (34018 - 38851 )

• (b) the recent breakout area is placed around 37500 levels

• In the coming session, the index is likely to open on a subdued note tracking mixed global cues . After initial decline we expect the elevated buying demand to emerge around Friday’s low (38110 ) . Hence after a initial decline use intraday dips towards 38080 -38145 for creating long position for the target of 38398 , maintain a stoploss at 37964

Nifty Bank Index – Daily Candlestick Chart

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