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NSE (Nifty): 15869

Technical Outlook

* The Nifty started Tuesday’s session with a positive gap (15812- 15867) and remained range bound throughout the session. In the process, the index scaled fresh all-time high of 15902. The daily price action formed a high wave candle carrying gap below it, indicating continuance of positive bias amid stock specific action

* The Nifty has gained 12% from late April lows over eight weeks leading it into overbought trajectory. As the index approaches psychological mark of 16000, intermediate bouts of volatility should not be seen as negative. We rather recommend sticking to buying on declines during such episodes of rise in volatility, as we observe elevated buying demand around 15500 over two weeks. While IT and RIL led the gains recently, the banking index has undergone healthy consolidation and poised at key support. We believe the Bank Nifty should protect downsides for the index in case of profit booking in recently run up stocks. 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 consolidation (15140-14150) breakout target at 16120

* Broader market indices relatively outperformed the benchmark as Nifty midcap and small cap index rose 0.5% compared to the Nifty, up 0.3%. Over the past four weeks, Nifty midcap and small cap indices have rallied ~12% that pulled weekly stochastic oscillator in overbought territory (placed around 96), indicating couple of days breather at higher levels can not be ruled out

* Structurally, the formation of higher high-low supported by improving market breadth signifies robust price structure that makes us confident to retain support base at 15400 as it is confluence of: a) As per change of polarity concept, earlier resistance of 15400 would now act as a key support b) 61.8% retracement of past three week’s rally (15145-15902), at 15435

* In the coming session, index is likely to open on a soft note tracking muted global cues. We expect Nifty futures to regain upward momentum after initial decline and trade with a positive bias. Hence, use intraday dip towards 15790-15815 to create long for target of 15898.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35247

Technical Outlook

* The daily price action formed a bull candle with a higher high - low signalling a positive follow through to previous session bullish hammer like candle . The index is currently placed at the upper band of the falling channel containing the recent breather . A follow through strength above the same will signal resumption of up move

* Goining ahead, we believe the current breather should be used as an buying opportunity for up move towards our target of 36200 in June 2021 as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708-30405) and the price parity with previous up move (30405-34287) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* In a smaller time frame the index has witnessed a shallow retracement as it has already taken 10 sessions to retrace just 50 % of its preceding eight sessions up move (33274 -35714 ) . A shallow retracement highlights a robust price structure and a higher base formation

* We do not foresee the index breaching the crucial support area of 34400 -34000 as it is confluence of the following technical observations :

* (a) 38 . 2 % retracement of the current up move (32115 -35810 ) placed at 34400

* (b) the recent breakout area and the April high (34287 )

* (c) The rising 50 days EMA placed at 34125 levels

* (d) The value of the rising demand line joining lows of April 2021 and May 2021 is placed around 34400

* In the coming session, the index is likely to open on a flat to negative note amid muted global cues . We expect the index to consolidate while maintaining higher high -low . Hence, use dips towards 35080 -35150 for creating long position for the target of 35360 , maintain a stoploss of 34970

* Among the oscillators the daily Stochastic is in up trend thus supports the positive bias in the index in coming sessions

Nifty Bank Index – Daily Candlestick Chart

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