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Nifty: 17516

Technical Outlook

* The Nifty pared initial gains after approaching upper band of consolidation placed at 17500. However, elevated buying demand from 17400 levels helped index to recoup entire losses and eventually close above 17500 mark. As a result, daily price action formed a high wave candle carrying higher high-low, indicating continuance of positive bias amid elevated volatility. On expected lines, broader market relatively outperformed the benchmark as Nifty midcap, small cap gained 0.6% and 1.24%, respectively

* Going ahead, we expect index to resolve above 17500 levels and gradually head towards psychological mark of 18000 in coming weeks. Hence, after 650 points rally seen over past three sessions, couple of days breather can not be ruled out. However, such breather should not be construed as negative instead dips should be capitalised on to build a quality portfolio. In the process, we do not expect Nifty to breach the key support threshold of 16800. Our constructive stance is based on following key evidences:

* A) past three sessions 650 points sharp up move helped index to resolve out of upper end of Andrew’s Pitchfork (drawn adjoining subsequent swing points off October highs of 18600), indicating conclusion of ongoing corrective phase and acceleration of momentum B) Current rally from last week low (16782-17543=761 points is now bigger than early November pull back (17613- 18210=597 points) indicating structural improvement C) Historically, any bull market correction to the tune of 10-15% get arrested when the percentage of Nifty500 stocks above 200 days EMA approaches around 50 to 60%. In ongoing corrective phase this count has approached 60% suggesting markets approaching sentiment low. Historically buying at such sentiment readings has been rewarding for investors

* Our projection of target of 18000 is confluence of:

* A) 61.8% retracement of entire decline since October high (18600- 16782) is placed at 16900 B) Implicated target of past two weeks consolidation (17500-16900) is placed around 18000

* The Nifty midcap and small cap indices resolved out of their base formation and closed above 50 days EMA, indicating rejuvenation of upward momentum that augurs well for structural uptrend in coming weeks. Therefore, focus should be on accumulating quality stocks to ride structural uptrend.

In the coming session, the index is likely to open on a subdued note tracking muted global cues. We expect index to trade with a positive while maintaining higher high-low. Hence use dips towards 17452-17478 for creating long position for target of 17567

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37082

Technical Outlook

* The daily price action formed a small bear candle which mostly remained contained inside previous session price range signaling consolidation after last two sessions strong up move . The index is seen sustaining above the last two weeks range breakout area (36800 -35300 ) and also the upper band of the falling channel breakout area containing entire decline highlighting strength as the index witnessed a rebound after a healthy base formation around the 200 days EMA (currently placed at 35360 )

* Index during current week has closed above the immediate hurdle of 36800 indicating extended pullback towards the 50 % retracement of the entire decline (41829 -35328 ) placed at 38500 levels which also coincides with the previous breakdown area

* Nifty Bank has immediate support at 35300 levels being the confluence of the 200 days EMA and the 80 % retracement of the August -October 2021 rally (34115 -41829 )

* The index maintained the rhythm of rebounding after 6 - 8 weeks of corrective phase as seen since April 2020 signaling continuation of the overall positive structure

* Among the oscillators the daily stochastic is rebounding taking support at its three periods average and is currently placed at a reading of 77 thus supports the continuation of the last two sessions pullback in the coming sessions

* In the coming session, index is likely to open on a soft note amid mixed global cues . We expect the index to trade in a range while holding above the immediate breakout area of 36700 -36900 . Hence use intraday dips towards 36990 - 37060 for creating long position for the target of 37330 , maintain a stoploss at 36880.

Nifty Bank Index – Daily Candlestick Chart

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