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NSE (Nifty):15576

Technical Outlook

* The Equity benchmarks recouped intraday losses in the second half of the session led by index heavy weight Reliance Industries along with auto stock. As a result, index formed a bull candle carrying lower high-low signifies extended breather amid stock specific action. In the process, Nifty midcap index clocked a fresh all time high of 26152 

* The broad based participation backed by improving market breadth signifies inherent strength that makes us reiterate our positive stance and expect the Nifty to challenge the 15700 mark in coming sessions. We believe the ongoing breather amid stock specific action would help the index to cool off overbought condition of daily stochastic oscillator (currently at 84) formed due to past 12 session’s 1070 points rally and make market healthy. Meanwhile, we expect broader market to endure its relative outperformance

* The broader structure remains robust as index has entirely retraced past 10 weeks decline (15432-14151) in just 5 weeks. Faster pace of retracement backed by improving market breadth highlights inherent strength that augurs well for extension of ongoing up trend. Currently, 86% components of Nifty 500 index are trading above 50 days EMA compared to April reading of 60%, highlighting improving market breadth. Hence, extended breather from here on should be capitalised to accumulate quality stocks to ride next leg of up move

* The Nifty midcap index accelerated upward momentum and scaled to a fresh all-time high, displaying resilience. We expect, broader market to endure its relative outperformance as the up move has been supported by sturdy market breadth that augurs well for durability of the ongoing rally

* The formation of higher high-low signifies elevated buying demand that makes us confident to retain support base at 14900 as it is confluence of: a) 80% retracement of past three week’s rally (14725-15661), at 14912 b) 50 days EMA is placed at 14882 In the coming session, index is likely to witness gap up opening tracking firm global cues. We expect, index to trade with positive bias amid expiry induced elevated volatility. Hence, use intraday dip towards 15625-15650 to create long for target of 15739

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35373

Technical Outlook

* The daily price action formed a hammer like candle with small real body and long lower shadow highlighting buying demand at lower levels around the 35000 levels . A follow trough strength above Wednesday's high (35415 ) will signal continuation of the positive bias

* Going forward, we expect the index to maintain positive bias and head towards our target of 36200 in coming weeks as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708 -30405 ) and the price parity with previous up move (30405 -34287 ) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* The index has witnessed a sharp rally of more than 11 % in just 12 sessions . Hence, a temporary breather at higher levels cannot be ruled out . However, we believe such a breather should not be seen as negative instead it should be capitalised to accumulate quality banking stocks

* The formation of higher high -low on the weekly chart signifies elevated buying demand that makes us confident to revise the support base higher towards 34000 levels as it is confluence of the following technical observations :

* a) 38 . 2 % retracement of the current up move (32115 -35713 )

* b) the recent breakout area and the April high (34287 )

* c) the rising 50 days EMA also placed around 33700 levels

* In the coming session, the index is likely to open on a positive note . Volatility is likely to be high owing to the weekly expiry . We expect the index to trade with positive bias . Hence, after a positive opening use intraday dips towards 35580 -35640 for creating long position for the target of 35880 , maintain a stoploss of 35470

* Among the oscillators the daily stochastic remain in up trend and is inching northward, indicating overall positive bias in the index in the short term

Nifty Bank Index – Daily Candlestick Chart

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