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NSE (Nifty): 17822

Technical Outlook

* The Nifty recouped initial losses and marched northward as intraday dips were bought into, leading the index to settle above 17800 mark. The daily price action formed a bull candle carrying higher high-low, indicating continuance of positive bias. In the process, Nifty Midcap and Small cap indices endured their record setting spree

* Going ahead, key monitorable would be the faster retracement which would lead to acceleration of upward momentum towards 18200 in coming weeks. The index has retraced 80% of past five sessions decline (17948-17452) in just two sessions, highlighting impending faster retracement. Failure to do so would lead to prolonged consolidation in 18000-17400 range amid stock specific action. The Nifty has been outperforming its global peers on a relative basis. Thus temporary cool off from hereon should be capitalised on to accumulate quality stocks as we enter the Q2FY22 earning season

* The Nifty midcap, small cap indices extended gains and scaled to a fresh all-time high. The current up move in the broader market has been backed by improvement in market breadth as currently more than 70% of index components are trading above 50 days EMA compared to August reading of 58% and 44%, respectively, highlighting strength that augurs well for durability of ongoing up move. In the process, we expect unlock, retail, chemical, textile themes to remain in focus. Thus, dips should be capitalized to accumulate quality stocks

* Key point to highlight since April 2021 is that, the Nifty has not corrected for more than 4% from recent highs and elevated buying demand emerged around 20 days EMA. In current scenario as well, index has already corrected 3% and found support from 20 days EMA, indicating inherent strength. Going ahead, we believe any extended correction from heron would get anchored around 17200 as it is confluence of: a) Since April 2021, index has maintained the rhythm of not correcting for more than 4%. In current scenario 4% from all time high of 17948 will complete at 17200 b) 80% retracement of September up move (17055-17948) , at 17233

In the coming session, index is likely to open on a subdued note tracking muted Asian cues. We expect Nifty to stage a pullback and maintain a higher high-low formation. Hence, use intraday dips towards 17750- 17775 for creating long position for target of 17863

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37741

Technical Outlook

* The daily price action formed a bull candle with a higher high - low as it rebounded taking support near the Monday’s bullish gap area (37300 -37355 ) indicating positive bias . Index sustaining above the gap area high of 383will signal continuation of the up move towards the last week 00 in the coming sessions

* Going ahead, we expect the index to continue with its healthy consolidation in the broad range of 36500 -38300 amid stock specific activity ahead of the Q 3 earnings

* Volatility is likely to remain high in the coming sessions on account of the volatile global cues and RBI monetary policy outcome on Friday . Buying on decline strategy has worked well in the last 16 months, thereby the current volatility would present incremental buying opportunity in quality banking stocks

* In the smaller time frame, over past six sessions index has retraced just 80 % of preceding four sessions up move (36526 - 38377), indicating a slower pace of retracement and a positive price structure

* The index has support base around 36500 levels as it is the confluence of the following technical observations :

* 50 % retracement of the current up move (34817 -38112 ) placed around 36500 levels

* Rising 50 days EMA is placed at 36555 level

* The upper band of the recent three months range breakout area is placed around 36300 levels

* In the coming session, index is likely to open on a flat note amid soft Asian cues . We expect the index to trade in a range with positive bias while sustaining above 37500 levels . Hence use intraday dips towards 37590 -37650 for creating long position for the target of 37890 , maintain a stoploss of 37470

Nifty Bank Index – Daily Candlestick Chart

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