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NSE (Nifty): 18211

Technical Outlook

* The Nifty mainly oscillated in 70 points range before witnessing sharp sell off in the fag end of the session. As a result, daily price action formed a high wave candle carrying higher high-low, indicating range bound activity ahead of monthly derivative expiry session

* Going ahead, we expect index to consolidate in the broader range of 18600-18000 with a stock specific action amid progression of Q2FY22 result season. Key point to highlight during recent corrective phase is that, over past seven session index has retraced 50% of preceding ten sessions rally (17452-18604). The slower pace of retracement signifies healthy consolidation. In the process, we expect Bank Nifty to relatively outperform the benchmark and drive index higher as banking components carries 37% weightage in Nifty. Thus, any dip from here on towards 18100 should be capitalised on to accumulate quality stocks

* The broader market indices have seen supportive efforts near 50 days EMA after correcting ~10% from life-time high. Since May 2020, the Nifty midcap and small cap indices have not corrected for more than 9-10% while sustaining around 50 days EMA. We expect both indices to maintain same rhythm and form a higher base above 50 days EMA. Thereby, focus should be on accumulating quality midcaps

* Structurally, we expect index to maintain the rhythm of not correcting for more than 4% observed since April 2021 which makes us believe that ongoing breather would find its feet around 17800 as it is confluence of: a) 80% retracement of recent up move (17613-18604) b) past two week’s low is placed at 17839

In the coming session, index is likely to open on a soft note tracking muted global cues. We expect, index to consolidate in 18100-18250 range amid rise in volatility owing to monthly expiry session. Hence, use dip towards 18135-18165 for creating long position for target of 18255

NSE Nifty Daily Candlestick Chart

Nifty Bank: 40874

Technical Outlook

* The daily price action formed a bear candle signaling profit booking after recent strong up move . The last two sessions price action remain enclosed inside Monday’s price range signaling a breather after a strong up move of ~ 7 % in just three session

* We believe the current breather should be used to accumulate quality banking stocks for the next leg of up move .

* We expect the Bank Nifty to continue its outperformance over the Nifty and rally higher towards 42200 levels as it is the confluence of the 161 . 8 % external retracement of the entire major decline of February -April 2021 (37708 -30406 ) and the price parity of the previous up move (36876 -40011 ) as projected from the current week low (39293 ) signals upside towards 42200 levels

* Index has already spent two sessions to retrace just 38 . 2 % of its preceding three sessions up move (39292 -41829 ) . A shallow retracement highlights positive price structure and a higher base formation

* 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 39200 levels as it is confluence of :

* 38 . 2 % retracement of the current up move 36877 -40587 is placed around 39200 levels

* The last week low is also placed around 39300 levels

* In the coming session, index is likely to open on a flat note amid soft global cues . We expect the index to trade in a range and consolidate its recent gains amid elevated volatility on account of the monthly derivative expiry . Hence use intraday dips towards 40780 -40840 for creating long position for the target of 41090 , maintain a stoploss of 40670

Nifty Bank Index – Daily Candlestick Chart

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