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NSE (Nifty): 18268

Technical Outlook

* The Nifty pared initial gains and formed a higher low around 18100 mark. The fag end buying demand helped index to recoup morning losses and settled at days high. As a result, daily price action formed a bull candle carrying higher high-low, indicating resumption of upward momentum. In the process, Nifty midcap and small cap regained upward momentum as buying demand emerged from 50 days EMA

* The decisive close above previous session high (18240) confirms pause in downward momentum. Going ahead, we expect index to form a higher base above the psychological mark of 18000 coincided with 20 days EMA that would pave the way to retest alltime high of 18600 in coming weeks. Key point to highlight since May 2020 is that, on eight out of ten occasions supportive efforts emerged in the vicinity of 20 days EMA. In the current scenario as well index has been bouncing from 20 days EMA over past three sessions, highlighting elevated buying demand. Also, the index has not corrected for more than 3-4% since April 2021. We expect index to maintain the same rhythm. Thus, any dip from here on towards should be capitalised on to accumulate quality stocks amid progression of Q2FY22 result season

* 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, the formation of higher peak and trough on the larger degree chart signifies inherent strength that 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 subdued note tracking muted Asian cues. We expect, index to stage pullback after initial dip and trade with a positive bias amid elevated volatility ahead of monthly derivative expiry. Hence, use dip towards 18223-18252 for creating long position for target of 18339

NSE Nifty Daily Candlestick Chart

Nifty Bank: 41238

Technical Outlook

* contained inside previous session price range signaling continuation of the positive momentum as the index is seen sustaining above the 41000 levels

* Going ahead, 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

* Despite elevated global volatility and surge in crude oil prices, Bank Nifty has shown resilience by maintaining higher high -low in all time frame and rallying to a fresh all time high

* Index during previous week has completely retraced its three sessions breather in just a single session highlighting resilience and continuation of the up move

* 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 to negative note . We expect the index to continue with its positive momentum while holding above 41000 levels . Hence use intraday dips towards 41040 -41100 for creating long position for the target of 41370 , maintain a stoploss of 40930

Nifty Bank Index – Daily Candlestick Chart

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