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NSE (Nifty): 15824

Technical Outlook

* In tandem with global market recovery, the Nifty staged a strong comeback after gap up opening and continued to march upward as intraday pullback were short lived. The daily price action formed a bull candle carrying higher high-low, indicating rejuvenation of upward momentum as elevated buying demand emerged from lower band of consolidation coincided with 50 days EMA placed in the range of 15600- 15500. In the process, index maintained the rhythm of not correcting for more than four session in a row since midMarch 2021

* The index has retraced more than 61% of past three sessions decline (15962-15578) in just a single session. Therefore, in coming session key thing to monitor is that, a decisive close above life highs (15962) would lead to faster retracement which would confirm the breakout from past six weeks consolidation (15900-15500). Failure to do so would lead to extended consolidation (15900-15500) with stock specific action amid progression of Q1FY22 earning season

* The Nifty small cap index relatively outperformed the benchmark as it gained 1.5% compared to Nifty up 1.2%. We believe, temporary breather from hereon would help broader market indices to form a higher base that would pave the way for next leg of up move

* Structurally, the persistent buying demand from key support zone of 15600-15500 signifies strong base formation, which we expect to hold going forward, as it is confluence of:

* a) 80% retracement of June-July rally (15450-15962), at 15550

* b) 10 weeks EMA placed at 15600

* In the coming session, index is likely to open on a flat note tracking mixed Asian cues. We expect index to trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip towards 15780-15805 to create long for target of 15893

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34677

Technical Outlook

* The daily price action formed a high wave candle with a higher high -low signalling a pullback from the oversold territory after last three sessions of sharp decline .

* The index on expected lines maintained the rhythm of not correcting more than 3 - 4 consecutive sessions as witnessed since April 2021 as in the current scenario it rebounded after three consecutive sessions of decline .

* Going ahead, we expect the index to hold above the lower band of the last seven weeks range placed around 34000 levels and witnessed a gradual pullback in the coming weeks towards the upper band of the range placed around 35800 levels

* The index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 -35810 ) over past seven weeks highlighting a positive price structure and a higher base formation

* We advise to capitalize the current breather as an incremental buying opportunity in quality large and mid cap banks as the overall structure remains positive

* The index has support base at 34000 -33800 levels being the confluence of the following technical observations :

* (a) The lower band of the last seven weeks consolidation range placed around 34000 levels

* (b) The rising 100 days EMA is also placed at 33973 levels

* In the coming session, index is likely to open on a flat to positive note tracking firm global cues . We expect the index to continue with its previous session pullback . Hence use intraday dips towards 34610 -34680 , for creating long position for target of 34890 , maintain a stoploss of 34490

* The daily stochastic is placed at an oversold territory with a reading of 13 , we expect the index to witness a pullback in the coming sessions

Nifty Bank Index – Daily Candlestick Chart

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