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NSE (Nifty): 14581

Technical Outlook

* Equity benchmarks concluded their weekly expiry session on a positive note as the Nifty gained 77 points or 0.5% to end Thursday’s session at 14581. The market breadth turned negative with A/D ratio of 1:1.5. Sectorally, financials, pharma and metal outshone while auto and FMCG underperformed. 

* The daily price action formed a bull candle confined within Monday’s long bear candle, indicating dwindling downward momentum. Meanwhile, long lower shadow highlights elevated buying demand emerged in the vicinity of lower band of consolidation placed around the 14300 mark

* Going ahead, a decisive close above 14800 would be needed to confirm conclusion of ongoing consolidation (14800-14300). Failure to do so would lead to prolonged consolidation amid stock specific action. Level of 14800 would be key to watch as it is confluence of 80% retracement of recent decline (14984-14249) coinciding with upper band of Monday’s negative gap (14835- 14652)

* The Nifty Midcap and Small cap indices are poised at their respective 50 days EMA, which has been held on multiple occasions since June 2020. Key point to highlight since March 2020 is that Nifty midcap and small cap indices have maintained the rhythm of not correcting for more than average 9-10% while sustaining above their 50 days EMA, indicating robust price structure.

* Currently, broader market indices have undergone healthy profit booking after approaching their 52 weeks highs and corrected 7%, hauling both indices in the vicinity of their 50 days EMA, indicating possibility of couple of percentage correction from here on cannot be ruled out. However, such a correction should be capitalised on to accumulate quality stocks, as we expect broader market indices to maintain aforementioned rhythm of not correcting for more than 9-10%

* We believe the immediate support for the Nifty is at 14250 while key structural support is placed at 13800 as it is confluence of:

* a) since March 2020, intermediate corrections in the Nifty have been to the tune of 9-10%. In the current scenario 10% correction will complete around 13900

* b) 80% retracement of the February rally (13596-15432), at 13963 In the coming session, we expect index to trade with a positive bias as past two sessions lower shadow highlights elevated buying demand. Hence, use intraday dip towards 14530-14555 to create long for target of 14644

NSE Nifty Daily Candlestick Chart

Nifty Bank: 32113

Technical Outlook

* The Nifty Bank index gained for the second consecutive session to close higher by 1 % on Thursday . The up move was lead by the private banking stocks as the Nifty private bank index closed higher by 1 % while the PSU bank index closed lower by 1 % . The Nifty Bank closed the session at 32113 up by 341 points or 1 . 1 % 

* The daily price action formed a small bull candle with a long lower shadow which maintained higher high -low signalling support at lower levels and continuation of the pullback for the second consecutive session . The index is currently placed at the Monday’s bearish gap area (32330 -31700 )

* Goining ahead, a close above the Monday’s gap down area will signal a pause in the current corrective trend and will opens upside towards 34000 levels . Failure to do so will lead to a choppy consolidation in the broad range of 32500 -30000 in the coming sessions amid stock specific action ahead of Q 4FY21 result season

* The index has immediate support at 30500 levels, while the major support is placed at 29700 levels being the confluence of the following technical observations : a) Price equality with the average of the previous two major correction in the last one year signals strong support around 29700 levels b)The rising long term 200 days EMA is also placed around 29790 c) the previous major low of January 2021 , prior to the union budget is placed around 29687 levels

* Hence, we advise Investor should adopt strategy of utilising the current declines to accumulate quality banking stocks from medium term prospective .

* In the coming session, the index is expected to open flat to positive note on back of firm global cues . The index is expected to continue with its last two sessions pullback . Hence use dips towards 31910 -31980 for creating long position for the target of 32230 , maintain a stoploss of 31780 Among the oscillators the daily stochastic has generated a buy signal moving above its three periods average thus supports the continuation of the current pullback in the coming sessions

Nifty Bank Index – Daily Candlestick Chart

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