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Sensex (65479) / Nifty (19389)

Despite muted morning sentiments across the board, the benchmark index Nifty experienced fourth consecutive session with a gap-up opening. However, unlike the previous sessions, prices dipped during the morning session, erasing the initial gains. Nevertheless, there was a strong recovery later on, surpassing the morning highs. There was some tentativeness in the market at higher levels, as the choppy session ended with a modest gain of 0.34%, a tad below 19400. The bullish trend continued for the sixth session in a row, but this time it appeared to be driven by a select few heavyweight stocks rather than a broad-based movement. There was also some hesitancy at higher levels, as indicated by the "Dragonfly Doji" candlestick pattern on the daily chart. As mentioned in our previous outlook, the upward trend is expected to continue in the near future due to a significant breakout on higher timeframe charts. However, given the recent strong surge, indicators are entering an overbought territory, and prices are significantly deviating from the 5EMA, indicating the possibility of occasional dips or sideways consolidation in the short term. In such a scenario, it is advisable for traders to secure some profits and consider any dip as a buying opportunity. The support levels to watch are the bullish gap left on Monday around 19200 – 19250 followed by strong support at the psychological level of 19000.

On the upside, the immediate resistance is at 19500 – 19540 in the uncharted zone. As we anticipate a consolidation phase in the key indices, it would be prudent to shift focus towards thematic approaches and specific stocks that offer better performance opportunities.

Exhibit 1: Nifty Daily Chart

Nifty Bank Outlook (45301)

Post a cheerful start, the banking index corrected a bit to reach the important psychological mark of 45000. However, bull grabbed this opportunity with both hands and hence smart recovery was seen to inch higher clocking fresh record highs of 45654.70. Due to some profit taking at the higher levels index concluded the session tad above 45300. In line with the recent trend, we are observing bulls making the most of any intraday dips in the market which is certainly a clear indication of the inherent strength the index after a quite long slumber phase.

Having said that, after such a smart rally in merely five sessions, a movement will not be as smooth as it has been since last Tuesday. It’s advisable to take some money off the table at higher levels and should avoid aggressive bets for a while. Directionally, the bigger picture still appears to be good and there is no sign of caution for the positional traders.

Till the time, we are respecting the support zone of 44800- 45000, dips should be treated as an opportunity. On the flip side, 45500-45750-46000 should act as immediate hurdles and any move beyond this shall open the doors for the next leg of the rally in near future.

Exhibit 2: Nifty Bank Daily Chart

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