IGI Logo

NSE (Nifty): 14956

Technical Outlook

* Equity benchmarks started the week on a positive note tracking frim global cues. The Nifty settled Monday’s session at 14956, up 18 points. Market breadth turned positive with A/D ratio of 1.2:1. Sectorally, IT, metal, pharma and PSU Bank outshone while FMCG took a breather 

* The daily price action formed a high wave candle carrying a higher high-low formation, indicating continuance of stock specific action amid elevated volatility

* The lack of faster retracement on either side signifies prolongation of ongoing consolidation (15300-14500) with a positive bias amid stock specific action that will help index to form a higher base above key support threshold of 14500 and gradually pave the way to head towards 15500 in coming weeks. In the process, we expect broader markets to endure its relative outperformance. Hence, any dips from here on should be capitalized to accumulate quality large caps and midcaps stock to ride the next leg of up move

* Key point to highlight is that the ongoing broader markets outperformance has been backed by strengthening of market breadth as currently ~78% of Nifty midcap and small cap components are sustaining well above their 50 days EMA compared to February reading of 72%. The sustenance above 50 days EMA along with rejuvenation market breadth signifies inherent strength that augurs well for durability of ongoing relative outperformance. The Nifty midcap index is hovering around 52 weeks EMA, meanwhile, small cap index is still 12% away from its life-time highs. Thereby, we expect small caps to witness acceleration in catch up activity within broader market space

* Structurally, the formation of higher peak and trough on the larger degree chart, indicates broader bull trend is intact that makes us confident to retain support base at 14500 as it is confluence of a) Since May 2020, the index has not sustained below its 50 days EMA. Currently, the 50 days EMA is placed at 14505 b)

* The 50% retracement of February rally (13597-15432), at 14514 c) Last week’s panic low is placed at 14468 In the coming session, Nifty future is likely to open on a positive note tracking firm global cues. We expect index to trade with a positive bias while sustaining above Monday’s low (14920). Hence, use intraday dip towards 14960-14985 to create long position for target of 15074

NSE Nifty Daily Candlestick Chart

Bank Nifty: 35275

Technical Outlook

* The Nifty Bank traded in a range with high volatility and closed marginally higher on Monday . PSU banking stocks outperformed as the Nifty PSU bank index closed higher by 1 . 6 % , while the private bank index closed on a flat note after last weeks up move . The Bank Nifty closed at 35275 up marginally by 47 points or 0 .14 % on Monday 

* The daily price action formed a high wave candle with long shadows in either direction highlighting intraday volatility and buying demand at lower levels around 35000 levels

* Going ahead, we expect the index to sustain above the major support area of 34000 -34500 and head towards the all time high 37700 in the coming weeks . While in the ongoing truncated week the index is expected to continue with its current range bound trade in the range of 36500 -34500

* The index over the past 15 sessions has retraced just 38 . 2 % of preceding 13 sessions sharp up move (29688 -37708), at 34645 . The slower pace of retracement signifies healthy retracement and a higher base formation .

* The recent healthy retracement has helped the index to cool off the overbought conditions of weekly stochastic oscillator (currently at 58 ) and paved the way for the next leg of up move . Therefore, any decline from here on should be capitalised on as incremental buying opportunity as we do not expect the index to breach the revised key support of 34500 -34000 as it is confluence of the following : a) The 38 . 2 % retracement of the budget rally (29687 -37708 ) placed at 34645 levels b) The last weeks panic low is also placed at 34658 levels

* In the coming session, the index is likely to open on a positive note on the back of strong global cues . volatility would remain high owing to the volatile global cues . We expect the index to trade with positive bias while holding above Mondays low (35100).

* Hence after a positive opening use intraday dips towards 35200 -35260 for creating intraday long for the target of 35480 , maintain a stoploss at 35090 Among the oscillators, the daily stochastic is placed at the neutral reading of 40 and is expected to continue with its current consolidation in the coming sessions

Bank Nifty Index – Daily Candlestick Chart

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer