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NSE (Nifty): 14896

Technical Outlook

* Equity benchmarks concluded the weekly derivative expiry session on a buoyant note and recorded a fresh all-time high of 14914. The Nifty ended the session at 14896, up 106 points or 0.7%. The market breadth remained positive with A/D ratio of 1.75:1. Barring IT, all major indices ended in the green led by FMCG, financials, metal and PSU. 

* The daily price action formed a bull candle carrying higher high-low over fourth consecutive session, indicating acceleration of upward momentum. In the process, cyclicals continued to outperform

* Going ahead, we expect the Nifty to maintain its winning streak and head towards our earmarked target of 15000 in coming sessions. Key point to highlight is that, past four sessions ~1320 points rally hauled daily stochastic oscillator to the overbought territory (at 95), indicating a couple of days temporary breather at higher levels cannot be ruled out.

* Therefore capitalising dips to go long would be the prudent strategy in quality large cap and midcap to ride the next leg of the rally. However, we believe, temporary breather would materialise only upon a decisive close below previous sessions low (14715), else continuance of positive bias amid stock specific action as we proceed the Q3FY-21 result season.

* Our target of 15000 on Nifty is based on: a) 123.6% external retracement of last decline (14753-13597), at 15026 b) long term rising trend line drawn adjoining 2010-2015 highs of 6338 and 9119, placed around 15050

* Nifty midcap index scaled to fresh all-time high as it extended gains over fourth consecutive session amid faster retracement, indicating robust price structure that makes us believe, broader market would continue to outperform. We expect small caps to witness catch up activity as small cap index is still ~20% away from all-time high compared to Nifty which has clocked a new all time highs

* Structurally, formation of higher peak, trough on the larger degree chart signifies persistent elevated buying demand which makes us confident to revise the support base for the Nifty at 14400 as it is 38% retracement of current up move (13597-14914) at 14410 coincided with Tuesday’s gap (14469-14281)

* In the coming session, we expect the index to maintain a higher high-low formation (amid volatility owing to RBI policy) as intraday dips were bought into over past couple of sessions. Hence, use intraday dips towards 14840-14865 to create long position for the target of 14958.

NSE Nifty Daily Candlestick Chart

Bank Nifty: 35344

Technical Outlook

* The Bank Nifty index settled weekly expiry on a buoyant note propelled by strong demand across private and PSU peers . The index gained 1 . 4 % to settle at 35344 . The Nifty PSU banking index outperformed its private peer with gain of 5 . 9 % . 

* The daily price action formed a sizeable bull candle which maintained its higher high -low formation despite expiry induced volatility indicating continuation of buying demand at an elevated levels and strong follow through momentum . In the process Index surpassed our target of 34800 levels and indicating extension of ongoing rally

* Going ahead, we expect Index to maintain its overall positive stance and head towards 35900 in coming weeks while elevated support is now being placed at 33500 levels . However, >5000 points gain in just six trading sessions has led stochastic to overbought trajectory with reading of 96 . Hence intermediate profit booking at higher levels cannot be ruled out and one should adopt buy on decline strategy

* Target of 35900 levels is projected based on 161 . 8 % extension of December rally (28976 to 32842 ) as projected from January low (29687 )

* We are confident in revising support upwards at 33500 mark which is : a) 38 . 2 % retracement of the current up move 29687 to 35413 placed at 33226 levels b) Value of a bullish gap post Budget day at 33583 levels

* In the coming session, we expect index is likely to open with a positive gap tracking firm global cues. We expect index to trade with a positive bias while maintaining higher high -low formation .

* Hence, we recommend utilizing intra day dips towards 35300 -35360 create fresh long positions in Bank Nifty February Futures to for target of 35490 meanwhile stop loss is placed at 35245 Among the oscillators, the daily stochastic has approached overbought status with reading of 96 and could attract profit booking at higher levels

Bank Nifty Index – Daily Candlestick Chart

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