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Nifty: 18817

Technical Outlook

• The Nifty traded in a range after starting the session on a positive note. However, fag end buying demand in banking heavy weights resolved index high. As a result, daily price action formed a sizable bull candle carrying higher highlow, indicating follow through strength to Monday’s doji like candle signifying resumption of upward momentum while sustaining above 20 days EMA which has been held since March.

• We believe, index to resolve higher and challenge the upper band of consolidation placed at 18900. Further, a decisive close above 18900 would lead to acceleration of upward momentum towards 19300 in the month of July. Thus, buy on dips would be the prudent strategy to adopt as the strong support for the Nifty is placed at 18400 levels.

• We expect Small caps to continue with its relative outperformance as Nifty Smallcap250 index has given a breakout from 20-month consolidation. Pattern implication suggest another 20-25% rally over next 12–15 month period. Thus, any profit booking from higher levels should not be construed as negative instead it should be used to accumulate quality stocks

• Structurally, the index has maintained the higher high-low formation on the monthly chart despite rise in volatility, indicating elevated buying demand that makes us confident to retain support base at 18400 as it is confluence of:

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 18486

• b) 61.8% retracement of current up move (18060-18886), at 18376

• c) 50 days EMA is placed at 18390

• d) current month’s low of 18464

Nifty Bank: 44121.50

Technical Outlook

• The Daily price action formed a sizeable bull candle that led index to broke past key hurdle and higher band of declining channel placed at 44000 mark indicating conclusion of cinorrective phase and further acceleration towards 44500 coming few sessions . In the process, index formed a base at 43300 which remains key support going ahead

• Bank Nifty has undergone a healthy retracement over past three weeks after 15 % rally in preceding ten weeks making structural trend healthier

• During this corrective phase buy on dips strategy has worked well and we maintain the buy on dips approach

• The index has immediate support at 43400 levels being the confluence of the last two weeks identical lows and the rising 50 -day ema

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