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NSE (Nifty): 14874

Technical Outlook

* Equity benchmarks concluded the weekly derivative expiry session on a positive note amid elevated volatility. The Nifty ended Thursday’s session at 14874, up 55 points or 0.4%. The market breadth remained sturdy with A/D ratio of 1.8:1. Broader markets relatively outperformed as Nifty midcap, small cap rose 0.5%, 1.2%, respectively. Sectorally, IT and metal outshone while financials underperformed. 

* The Nifty started Thursday’s session on a positive note and surpassed the upper band of the consolidation at 14900. However, profit booking in the second half pared most of the initial gains and it closed below 14900. As a result, the daily price action formed a Doji candle, indicating elevated volatility amid stock specific action

* The lack of faster retracement on either side signifies prolonging ongoing consolidation 14900-14400. We believe, sustainability above 14900 (on a closing basis) supported by participation from BFSI and Telecom heavyweights is necessary for an extended up move. The absence of such participation would lead to continuance of ongoing consolidation amid stock specific activity

* Key point to highlight is that Nifty midcap and small cap indices have approached the vicinity of their 52 week’s high after maintaining the rhythm of not correcting for more than 9-10% while sustaining above its 50 days EMA since June 2020, which evidently shows robust price structure. We expect the relative outperformance of broader market indices to endure and help them scale new highs in the coming sessions

* Structurally, we believe the index has been forming a strong support base in the vicinity of 14400. Hence, any cool off from here on should be capitalised on as incremental buying opportunity in quality large cap and midcap stocks ahead of the upcoming Q4FY21 result season.

* Level of 14400 would act as key support as it is 61.8% retracement of the post Budget rally (13662-15432), at 14338 In the coming session, holding above weekly expiry low (spot-14821) would keep bias positive, else extended consolidation amid stock specific action. Hence use intraday dip towards 14875-14905 for creating long position for the target of 14990

NSE Nifty Daily Candlestick Chart

Nifty Bank: 32783

Technical Outlook

* The Nifty Bank index failed to capitalize on the positive start and gave up its intraday gain to close down by 0 . 6 % on Thursday . The decline was broad based as 10 out of the 12 index constituents closed in the red . The Nifty Bank closed the session at 32783 levels down by 208 points or 0 . 6 % 

* The daily price action formed a small bear candle as the index failed to sustain above Wednesday high (33191 ) and gave up its gains in the second half of trade signalling continuation of the range bound trade with corrective bias

* Going ahead , the index is likely to consolidate in the range of 32300 -33300 . Only a sustained move above Thursday high (33306 ) will open upside towards 34000 levels in the coming sessions .

* The support for the index is currently placed at 32600 -32300 levels being the confluence of the following technical observations : a) 61 . 8 % retracement of the previous rally (29687 -37708 ) placed at 32750 levels b) Major breakout area of previous multiple yearly highs placed around 32500 levels c)The rising 100 days EMA is also placed at 32252 levels

* The index has hurdle at 34000 levels as it is the confluence of the previous week high and 50 % retracement of the last leg of decline (36497 -32330 ) .

* The last seven weeks corrective decline has lead to the weekly stochastic placed near the oversold territory with a reading of 22 indicating an impending pullback in the coming weeks . However, the index require to start forming higher high -low in the daily chart on a sustained basis and close above the immediate hurdle of 34000 to signal a resumption of up move

* In the coming session, the index is likely to open on a flat note on back of muted global cues . Volatility is likely to remain high . We expect the index to trade in a range with positive bias . Hence use dips towards 32710 -32780 for creating long position for the target of 32990 , maintain a stoploss of 32590

Nifty Bank Index – Daily Candlestick Chart

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