IGI Logo

NSE (Nifty): 15854

Technical Outlook

* The Nifty shrugged off early losses and resolved higher towards upper band of consolidation. The daily price action formed a bull candle carrying shadows on either side, indicating positive bias amid elevated volatility

* The rejuvenation of upward momentum in key heavyweight sectors (IT, BFSI that cumulatively have 54% weightage in the Nifty) signifies structural improvement that makes us confident that index would resolve out of past five week’s consolidation (15900-15500) and propel the move toward our earmarked target of 16100 in coming weeks. Key point to highlight is that, the IT index has seen faster pace of retracement on the smaller degree chart as it retraced past two weeks decline in just a single session. At the same time, the Bank Nifty is on the verge of resolving out of past six weeks consolidation. Hence, follow through traction in banking and IT would drive index higher. Meanwhile, we expect the Nifty to maintain the rhythm of not correcting for more than three consecutive weeks in a row observed since April 2020. Hence, dips should be capitalised on as incremental buying opportunity amid Q1FY22 earning season. Our earmarked target of 16100 is based on following observations:

* a) price parity of post Budget rally (13597-15432), projected from April low of 14151, at 16055 

* b) past two month’s range (15140-14150) breakout target at 16120

* The Nifty midcap and small cap extended their record setting spree, highlighting broader market outperformance. We expect broader markets to continue their northbound journey while forming a higher base above their 50 days moving average

* Structurally, past five week’s shallow retracement helped the index to form a higher base at 15600-15500 zone, which we do not expect to be breached as it is confluence of:

* a) 61.8% retracement of past four week’s rally (15145-15915), at 15440

* b) 10 weeks EMA placed at 15543 In the coming session, we expect index to trade with a positive bias amid rise in volatility owing to weekly derivative expiry. Hence, capitalise intraday dip towards 15815-15842 to create long for target of 15929.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35668

Technical Outlook

* The daily price action resulted in a high wave candle with a higher high -low signalling continuation of the up move . The index is currently placed at the cusp of breaking above the last five weeks range 35800 -34000 highlighting strength

* Going ahead, we expect the index to maintain positive bias and head towards 36200 levels in the coming weeks as it is the 80 % retracement of the February – April 2021 decline (37708 - 30405 ) . Any minor pullback ahead of the weekly expiry provides incremental buying opportunity in quality large and midcap banking stocks

* On a smaller time frame the index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 - 35810 ) over past five weeks

* Key observation is price action has been contracting over past few sessions suggesting that breakout from this consolidation is approaching . We expect index to breakout on the higher side given shallow retracement and robust price structure

* The formation of higher high -low in the weekly time frame gives us confident to maintain the support base at 34500 being the confluence of the following technical observations :

* (a) The 61 . 8 % retracement of the recent up move (33908 - 35811 ) placed at 34550 levels

* (b) The value of the rising demand line joining major lows since May 2020 is placed around 34630

* (c) The rising 50 days EMA is also placed at 34670 levels

* In the coming session, the index is likely to open on a flat to positive note amid mixed Asian cues . Volatility is likely to remain high on account of the weekly expiry . W e expect the index to trade with positive bias while maintaining higher high - low . Hence use intraday dips towards 35590 -35650 , for creating long position for target of 35890 , maintain a stoploss of 35480.

Nifty Bank Index – Daily Candlestick Chart

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer