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Nifty : 19413

Technical Outlook :

• The index started the session on a positive note and recorded a lifetime high of 19567. However, profit booking dragged index lower. As a result, daily price action formed a high wave candle, indicating extended breather.

• The index is undergoing time correction as over past eight sessions Nifty has been trading in 19500-19300 range. We believe, ongoing healthy consolidation will help index to cool off the overbought conditions and gradually pave the way towards 19700 in the coming week. In the process, stock specific action would continue as we enter the earning season.

• Key point to highlight is that, since March Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Consequently, buy on dips has been the prudent strategy to adopt. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity since we do not expect index to breach the key support threshold of 19100.

• On the broader market front, the Nifty midcap and small cap indices have approached overbought conditions after past fifteen weeks >25% rally. Thus, bouts of volatility at higher levels can not be ruled out. Secondary correction is part of the structural up trend. Thus, dips in broader market should be capitalized to build a quality portfolio amid ongoing earning season

• Structurally, the formation of higher peak-trough on the monthly chart signifies elongation of rallies that makes us confident to retain support base at 19100, as it is :

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 19123

• b) 50% retracement of current up move (18645-19523), at 19085

Nifty Bank: 44665

Technical Outlook :

• The Daily price action formed a bear candle as late profit booking in PSU banking space post inflation numbers led index to close off morning highs . However index maintained higher high low on daily chart after a gap of six sessions indicating supportive efforts in the vicinity of rising 20 -day EMA (44500 )

• Key observation in recent decline from life highs of 45655 is that index has retraced preceding six session rally (43519-45655) by just 50% over seven session. Shallow pace of retracement of rally is a sign of positive price structure and therefore buying dips is recommended

• We expect index to consolidate in coming week amid positive bias in the 44000 -45500 range . Sustaining above last week high of 45500 would indicate resumption of upward momentum towards 46300 in July as it s 138 . 2 % external retracement of Dec -Mar decline (44151 -38613 )

• PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround . Correction in PSU stocks is a buying opportunity

• We expect strong support to exist around 44000 as it is 61 . 8 % retracement of most recent up move from lows of 43519 and confluence of rising 50 day ema (44000 )

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