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Technical Outlook

Equity benchmarks recouped intraday losses and ended Tuesday’s session on a flat note. The Nifty ended the session at 18385, down 35 points or 0.2%. In the coming session, index is likely open on a positive note tracking firm global recovery. We expect, index to witness follow through strength to Tuesday’s hammer like candle and form a higher high-low. Thus, intraday dip towards 18410-18442 should be used to create intraday long positions for target of 18529

We expect, index to extend the ongoing consolidation (18700-17900) and form a higher base wherein stock action would prevail. The past two weeks secondary correction helped index to haul the overbought conditions (weekly stochastic cooled off to 38 levels) and make market healthy. Thus, any dip from hereon should be capitalised to accumulate quality stocks as we do not expect index to breach the key support of 17900. The ratio chart of Nifty 500/Nifty 100 has turned up from lower band of one-year range, indicating outperformance of Mid/small caps. We expect both indices to relatively outperform and head gradually towards their respective highs

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