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Nifty : 19979

Technical Outlook

• The Nifty staged a strong rebound after initial blip and recorded yet another lifetime high of 19991. As a result, daily price action formed a sizable bull candle carrying higher highlow, indicating acceleration of upward momentum. As a result, Nifty approached near our earmarked target of 20000

• The elongation of rallies followed by shallow retracement highlights inherent strength that makes us confident to reiterate our positive stance and expect Nifty to head towards psychological mark of 20000. Key point to highlight is that, over past fifteen sessions index has rallied >1100 points which hauled daily and weekly stochastic oscillator in overbought conditions, indicating minor profit booking in recently run up stocks can not be ruled out. Thus, dips should be utilised to accumulate quality stocks as strong support for the Nifty is placed at 19500.

• The Nifty midcap index scaled to fresh lifetime high while small cap index is still 5% away from its all time high. Going ahead, we expect broader market to continue with its relative outperformance wherein small cap index would accelerate its relative outperformance. Further, the persistent improvement in market breadth signifies inherent strength that augurs well for durability of ongoing up move.

• Structurally, since March buy on dips strategy has continued to fare well as Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity. Thus, we revise our support base upward at 19500, being confluence of:

• A) 38.2% retracement of current up move (18645-19819), at 19371

• B) 20 days EMA is placed at 19272

• C) Since March index has not closed below previous weeks low. Last week’s low is placed at 19327

Nifty Bank: 46187

Technical Outlook

• The Daily price action formed strong bull candle that led index close to our target of 46300 and in the process also led oscillators on daily time frame to overbought trajectory . We maintain positive bias in the index as long as higher high -low sequence continues therefore one should adopt buying the dips approach

• Going forward sustainability above 46300 would be crucial for further strength . Sustaining above 46300 would lead index to 46800 where current upmove from 44547 would achieve equality with previous upmove (43519-45655)

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

• Key short term support is now being revised upwards to 45200 being last Tuesday’s higher low

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