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Nifty: 16240

Technical Outlook

• The Nifty bucked the weak global cues to open marginally lower and gradually inched up in first half of the session led by banking stocks. However, selling pressure in last hour led index to close in red. Price action formed a bear candle which remained contained within prior session’s range indicating breather in downward momentum after six session decline.

• In each of past six sessions index has formed lower high on daily time frame. For a meaningful pullback to materialize from current oversold readings, index need to decisively close above past two sessions identical high of 16400, else continuance of corrective bias amid elevated global volatility. Further, a decisive breach below immediate support of 16100 would lead to extended correction towards March low of 15700. We observe that past four weeks corrective move hauled daily and weekly stochastic oscillator in extreme oversold territory (currently placed at 11, each). Historically, after approaching such lower reading, markets have witnessed technical pullback. Thus, we advise traders to refrain from creating aggressive short position. Instead, use dips to construct portfolios in quality stocks in a staggered manner. Immediate upsides are capped at breakdown area of 16800

• Historically, over past two decades, on 16 out of 20 occasions despite transitory breach (not greater than 5%) of 52-week EMA (currently 16600) index has generated decent returns in subsequent 3 month and 6 months. In current scenario 5% from 200 days EMA will mature at 15700

• The broader market indices continue to underperform with lower high-low formation and small cap index breaking February lows. We expect relative underperformance in broader market to continue for few more sessions In the coming session, index is likely to open on a subdued note tracking mixed global cues. We expect, supportive efforts to emerge from key support of 16100. Therefore, after initial blip use dip towards 16102-16136 for creating long position for the target of 16211

Nifty Bank: 34482

Technical Outlook

• The daily price action formed a bull candle with a long upper shadow highlighting intraday volatility . The index however formed a higher high -low signaling buying demand emerging around the support area of 34000 amid oversold placement of the daily and weekly stochastic oscillators

• Key support for the index is placed at 33500 -34000 levels being the 80 % retracement of the entire March up move, holding above the same will keep pullback option open . Failure to do so will lead to an extended correction . Immediate upsides are capped at 36000 levels

• Index has stiff hurdle around 36000 levels being the confluence of last Thursday high and the 38 . 2 % retracement of current decline (38765 -33927 )

• The formation of lower high -low on the monthly chart signifies extended correction . However, the index has witnessed a shallow retracement of its preceding up move and has already taken five weeks to retrace just 61 . 8 % of its preceding four weeks up move (32156 -38765 ) . A shallow retracement signals a higher base formation . The index has support around 33500 - 34000 levels as it is confluence of :

• (a) 80 % retracement of the entire March 2022 up move (32155 - 38765 ) placed at 33500 levels

• (b) bullish gap area of 10th March 2022 is also placed around 33700 levels

• Among the oscillators the weekly stochastic is placed at an oversold territory with a reading of 17 signaling an impending pullback in the coming weeks In the coming session, index is likely to open on a soft note amid weak global cues . We expect index to trade in a range while holding above Tuesday low (34218 ) . Hence after a negative opening use intraday dips towards 34190 -34270 for creating long position for the target of 34530 , maintain a stoploss at 34080

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