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NSE (Nifty): 17691

Technical Outlook

* The Nifty started Monday’s session with a positive gap (17557- 17581) and inched northward during the session. The daily price action formed a bull candle carrying higher high-low, indicating elevated buying demand emerged from 80% retracement of last leg of up move (17326-17948) amid oversold placement of daily stochastic oscillator (which was placed at 20). Meanwhile, Nifty Midcap and Small cap indices scaled fresh all time highs

* Going ahead, we expect the index to resolve higher and challenge the upper band of consolidation placed at 17800 in coming sessions. Key point to highlight is that the index has maintained the rhythm of not correcting for more than four sessions in a row since mid-March 2021 as elevated buying demand emerged from 20 days EMA, which has been held since April 2021, highlighting inherent strength. Thus, any dip from here on should be capitalised on to accumulate quality stocks as we enter the Q3FY22 earning season

* The broader market indices regained upward momentum after couple of weeks and notched fresh all-time high. The current up move in Nifty midcap and small cap indices have been backed by improvement in market breadth as currently more than 70% of index components are trading above 50 days EMA compared to August reading of 58% and 44%, respectively, highlighting strength that augurs well for durability of ongoing up move. In the process, we expect unlock, retail, chemical, textile themes to remain in focus. Thus, dips should be capitalized to accumulate quality stocks

* Structurally, formation of higher peak and trough on the larger degree chart signifies positive trend is still intact. We expect 17200 would continue to act as strong support as it is confluence of: a) Since April 2021, index has maintained the rhythm of not correcting for more than 4%. In current scenario 4% from all time high of 17948 will complete at 17200 b) 80% retracement of September up move (17055-17948) , at 17233

In the coming session, index is likely to open on a negative note tracking weak global cues. We expect Nifty to hold the intermediate support of 17500 and stage a pullback. Hence, use intraday dips towards 17550-17575 for creating long position for target of 17665

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37579

Technical Outlook

* The daily price action formed a bull candle with a higher high - low and a bullish gap below its base (37300 -37355 ) indicating positive bias . Index sustaining above Monday’s gap area will signal up move towards the last week high of 38300 in the coming sessions

* Going ahead, we expect the index to continue with its healthy consolidation in the broad range of 36500 -38300 amid stock specific activity ahead of the Q 3 earnings

* Volatility is likely to remain high in the coming sessions on account of the volatile global cues and RBI monetary policy outcome on Friday . Buying on decline strategy has worked well in the last 16 months, thereby the current volatility would present incremental buying opportunity in quality banking stocks

* In the smaller time frame, over past five sessions index has retraced just 80 % of preceding four sessions up move (36526 - 38377), indicating a slower pace of retracement and a positive price structure 

*The index has support base around 36500 levels as it is the confluence of the following technical observations :

* 50 % retracement of the current up move (34817 -38112 ) placed around 36500 levels

* Rising 10 weeks EMA is placed at 36580 level

* The upper band of the recent three months range breakout area is placed around 36300 levels

* In the coming session, index is likely to open on a negative note amid weak global cues . We expect the index to trade in a range while holding above Monday’s gap area of 37300 . Hence use intraday decline towards 37310 -37380 for creating long position for the target of 37590 , maintain a stoploss of 37190

Nifty Bank Index – Weekly Candlestick Chart

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