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Nifty :18212

Technical Outlook

* The Nifty started Wednesday’s session with a positive gap (18055-18170) and sustained above the gap area throughout the session. As a result, daily price action formed a bull candle carrying higher high-low, indicating extension of ongoing up move as intraday dips remained short lived

* In line with our view, the Nifty resolved above 18200 mark on a decisive note backed by across sector participation, exhibiting inherent strength, which makes us confident of revising target to 18600 in the run up to Budget 2022. Hence, any temporary breather from here on should not be construed as negative. Instead dips should be capitalised on as fresh entry opportunity from medium term perspective. Our revised target of 18600 is based on following observations:

* a) lifetime high is placed at 18600

* b) since June 2020, on multiple occasions elevated buying demand emerged from five months’ average that paved the way to challenge lifetime highs in subsequent months. In the current scenario as well the index rebounded after finding support from five months’ average. Hence, it offers a fresh entry opportunity to ride a move towards 18600

* The broader market indices continued to outperform wherein small caps led the space. Wednesday’s gains have put small cap index back within striking distance of its life time high as it is merely 1% away from its record high. Currently, 70% constituents of Nifty 500 are sustaining above 50 day EMA compared to mid-December reading of 49%, highlighting improvement in market breadth that augurs well for durability of ongoing up move.

* Structurally, the formation of higher high-low signifies elevated buying demand, that makes us confident to revise support base at 17700 as it is 50% retracement of current up move (17238-18228) coincided with Thursday’s low of 17655 In the coming session, the index is likely to witness gap up opening tracking buoyant global cues. We expect index to sustain above 18200 levels amid elevated volatility owing to weekly derivative expiry. Hence use intraday dip towards 18250-18282 for creating long position for target of 18369

NSE Nifty Daily Candlestick Chart

Nifty Bank: 38727

Technical Outlook

* The daily price action formed a doji candle with a higher high -low signaling continuation of the positive momentum . The index has maintained higher lows in the daily chart for the ninth consecutive session signaling strength . In the process the index has retraced 61 . 8 % of its entire preceding decline (41829 -34018 )

* Going ahead, we expect the index to maintain positive bias and gradually challenge the psychological 40000 levels the coming weeks being the 80 % retracement of the entire decline (41829 -34018 ) . However after the recent strong up move a couple of days of breather can not be ruled out as the daily stochastic is placed at the overbought territory with a reading of 95.

* W e suggest to adopt a buy on dips strategy wherein the downside remains cushioned around strong support of 37500 levels . Hence corrective dips should not be construed as negative instead capitalise it as incremental buying opportunity .

* The index has already retraced 61 . 8 % of the entire nine weeks decline (41829 -34018 ) in just three weeks signaling a robust price structure

* The index has support around 37500 levels being the confluence of the following technical observations :

* (a) 23 . 6 % retracement of the current up move (34018 -38851 )

* (b) the recent breakout area is placed around 37500 levels

* In the coming session, the index is likely to open on a positive note amid firm global cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence after a positive opening use intraday dips towards 38700 -38780 for creating long position for the target of 38990 , maintain a stoploss at 38590

Nifty Bank Index – Daily Candlestick Chart

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