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NSE (Nifty): 15301

Technical Outlook

* The Nifty started Wednesday’s session on a positive note and inched northward as intraday dips were bought into. As a result, daily price action formed a bull candle carrying higher high-low, indicating continuance of positive bias

* The formation of higher high-low supported by rotational sectoral leadership highlights broader participation that supports our stance of Nifty challenging lifetime high of 15400 in coming sessions and eventually head towards revised target of 15700 in the month of June, as it is 123.6% external retracement of FebApril Correction (15432-14151). Hence, any temporary cool off from here on should be capitalised as incremental buying opportunity in quality large cap and midcaps

* Key point to highlight in the current up move off May low (14416) is that, the secondary corrections have been shallower in nature, highlighting elevated buying demand. In the process, market breadth has improved as 86% components of Nifty 500 index are trading above 50 days EMA compared to April reading of 60%, that augurs well for durability of ongoing up trend

* The Nifty small cap index maintained its relative outperformance. Key point to highlight is that the outperformance in the broader market indices has been backed by improving market breadth as currently ~84% of index components are trading above their 50 days EMA compared to April reading of ~60%. We expect, broader market to accelerate their relative outperformance wherein catch up activity would be seen in small cap index, as Nifty Midcap index is placed at all time high whereas small cap index is still 5% away from lifetime highs

* Structurally, we believe any dip from here on would get anchored around 14600 as index has formed a higher base formation at 14600 despite escalating concern over second wave of Covid-19. Thus, we believe strong support is placed at 14600 as it is confluence of:

* a) 80% retracement of current up move (14416-15294), at 14592

* b) past three week’s low at 14592

* In the expiry induced volatile session, we expect index to trade with a positive bias amid stock specific action. Hence, use intraday dip towards 15252-15278 to create long for target of 15365.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34684

Technical Outlook

* The daily price action formed a high wave candle signalling consolidation and higher base formation near the recent breakout area and the April high (34287 ) . We expect the index to sustain above the same and resume its up trend in the coming sessions

* As mentioned in earlier edition the index has recently registered a breakout above the falling supply line joining major highs of the last three months as can be seen in the adjacent chart highlighting strength and resumption of the up move .

* We expect the index to maintain positive bias and head towards 36200 levels in the coming month 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

* Index in the smaller time frame has witnessed a faster retracement of the last falling segment as 11 session’s decline (34287-32115) was completely retraced in just five sessions. A faster retracement in less than half the time interval signals a robust price structure

* The formation of higher high -low on the weekly chart signifies elevated buying demand that makes us assured to revise the support base higher towards 33000 levels as it is confluence of the 61 . 8 % retracement of the current up move (32115 -35216 ) and the rising 50 days EMA is also placed at 33230 levels

* In the coming session, the index is likely to open on a flat note amid muted global cues . Volatility is likely to be high owing to the monthly expiry . However we expect the index to trade with positive bias while sustaining above Tuesday’s low (34434 ) . Hence use dips towards 34520 -34580 for creating long position for the target of 34840 , maintain a stoploss of 34390

Nifty Bank Index – Daily Candlestick Chart

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