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NSE (Nifty): 18419

Technical Outlook

* The Nifty achieved our earmarked target of 18600 and underwent profit booking in the recently ran up stocks. In the process, it saw a roller coaster move as the Nifty witnessed over 600 points intraday volatility. Daily price action formed a bearish engulfing candle that confined last sessions high wave candle, indicating profit booking at higher levels. The Nifty midcap and small cap profit booking was on account of sharp decline in run up stocks post 25% rally in eight weeks

* Key point to highlight is that over the past two weeks the Nifty has rallied 1150 points, hauling daily and weekly stochastic oscillator in overbought territory (currently at 86 and 92, respectively), indicating couple of days breather from here on cannot be ruled out. This would make market healthy. In the process, we expect stock specific action to prevail amid progression of Q2FY22 result season. The intermediate correction is a common phenomenon in a bull market. Thus, temporary breather from her eon should not be construed as negative. Instead dips should be capitalised on to accumulate quality stocks

* The broader market indices have rallied 25% over past eight weeks which pulled the weekly stochastic oscillator in overbought territory. We believe, Nifty midcap and small cap indices would undergo healthy consolidation that would set the stage for next leg of up move

* Structurally, elongated rallies followed by shallow retracement highlights robust price structure that makes us confident to revise support base upward at 17800 as it is confluence of: a) 61.8% retracement of past two weeks up move (17452-18543) b) 20 days EMA is placed at 17838 which has been held since April 2021

In the coming session, the index is likely to open on a benign note tracking firm global cues. We expect the Nifty to hold Monday’s gap area of 18340-18380 and trade with a positive bias. Hence, use intraday dips towards 18385-18410 for creating long position for target of 18497

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 39540

Technical Outlook

* The daily price action formed a bear candle signaling profit booing around psychological 40000 levels . The index however hold above the bullish gap area of Monday (39375 -39570), sustaining above which will keep the bias positive

* The index during previous week has logged a resolute breakout from past three week’s consolidation range (38300 - 36500 ) indicating strength that makes us confident of revising our target to 40500 levels as it is the confluence of the measuring implication of the last three weeks range breakout (38300-36500) and the 138.2% external retracement of the entire major decline of February -April 2021 (37708 -30406 ) placed at 40500 levels

* We expect the index to hold above the immediate support area of 38300 and any breather towards the same provides incremental buying opportunity

* Structurally, the formation of higher peak and trough in all time frames signifies robust price structure, that makes us confident to revise support base upward at 38300 levels as it is confluence of :

* The upper band of the last three weeks’ consolidation breakout area placed around 38300 levels

* 38 . 2 % retracement of the current up move 36877 -39374 is also placed around 38300 levels

* In the coming session, index is likely to open on a flat to positive note amid firm global cues . We expect the index to trade in a range with positive bias while consolidating its recent gains . Hence use intraday dips towards 39390 -39450 for creating long position for the target of 39690 , maintain a stoploss of 39270

Nifty Bank Index – Daily Candlestick Chart

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