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Nifty

Technical Outlook

* The Nifty staged a sharp recovery post an initial gap down opening (17007-16870) but failed to sustain at higher levels. Eventually, the index pared initial gains entirely and approached its 200 day’s EMA placed at 16880. The daily price action formed a bear candle with shadow on the upside, indicating continuance of corrective bias

* The formation of lower high-low signifies prolonging of corrective bias. Therefore, for a pause in the ongoing downward momentum the index needs to decisively close above the previous session’s high of 17038 else corrective bias will continue. Key point to highlight is that, past three week’s 1275 points decline hauled daily and weekly stochastic oscillator in oversold territory with a reading of 4 and 16, respectively, indicating possibility of technical pullback from oversold conditions cannot be ruled out. We expect supportive efforts to emerge around key support zone of 16800- 16700 amid elevated volatility ahead of monthly expiry coupled with RBI policy. On the upside, 17500 would continue to act as immediate hurdle as it is 50% retracement of past two week’s decline (18096-16820)

* Structurally, over the past five weeks index has retraced merely 38.2% of preceding nine week’s rally (15185-18000) while absorbing global volatility, signifying healthy retracement amid relative outperformance against global peers that makes us believe, ongoing corrective move would find its feet around 16800-16700 zone as it is confluence of:

* A) 50% retracement of June-September rally of 15185-18000

* B) 52 week EMA is placed at 16760

* In line with the benchmarks, broader market indices retraced 38% of past two months ~30% rally. We believe, ongoing healthy retracement would help broader market indices to cool off overbought conditions and set the stage for next leg of up move • In the coming session, index is likely to witness gap up opening tracking strong pullback in global markets. We expect index to behave in tandem with its global peers. Hence, after initial up move use dip towards 16952-16982 for creating long position for the target of 17069

Nifty Bank

Technical Outlook

* The daily price action formed a bear candle with continuation of lower high -low sequence indicating failed intra day pullbacks amid extended profit booking in run up stocks and expiry related trades weighing down the prices . Past ten session decline measuring 10 % from highs of 41840 has rendered prices to oversold readings with daily stochastic of 4 ahead of Friday’s monetary policy

* Going ahead, we expect supportive efforts to emerge from the key support zone of 37300 -37500 however such price action would be confirmed only once index starts making higher high -low formation . Immediate hurdle is now placed at 39200 mark which is 38 . 2 % retracement of past ten session decline (41840 -37626 )

* Structurally , in the longer time frame the index has witnessed a faster retracement as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting overall positive bias

* The index has support around 37300 -38000 levels as it is the confluence of the 100 days EMA (currently placed at 37340), lower band of rising channel accompanying price action since June lows at 37450 and the 50 % retracement of the major up move (32290 -41840 ) In the coming session index is likely to witness gap up opening tracking positive global cues . Hence after a positive opening use intraday dip towards 37960 -38020 for creating long position for the target of 38310 , maintain a stoploss at 37828

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