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NSE (Nifty): 18477

Technical Outlook

* The Nifty started on Monday with a positive gap (18250-18445) over third consecutive session and approached the vicinity of our earmarked target of 18600. Post that it oscillated in 100 points range. The daily price action formed a small bodied bear candle with shadow on either side carrying huge positive gap, indicating continuance of positive bias. In the process, broader market indices scaled a fresh all-time high over a tenth session in a row

* Going ahead, we expect the index to trade with a positive bias and gradually head towards 18600 in coming sessions. Key point to highlight is that, over past two weeks Nifty has rallied ~1100 points that hauled daily and weekly stochastic oscillator in overbought territory (currently placed at 96 and 93 levels), indicating round of minor profit at higher levels cannot be ruled out. However, such a breather should not be construed as negative instead dips should be capitalised on to accumulate quality stocks amid progression of the Q2FY22 earning season. Our target of 18600 is based on:

* a) Since April 2020, the index followed a rhythm wherein magnitude of each major rally has been at least 32%, containing in-between corrective phases of 5-6%. Current rally since April 2021 lows of 14151 would achieve measuring implication at 18600

* b) The implied target of past three week’s consolidation breakout (18000-17400) is placed at 18600

* The Nifty midcap index maintained its relative outperformance and scaled a fresh all-time high. The current up move in the broader market has been backed by improvement in market breadth as currently 82% 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 up trend

* Structurally, elongated rallies followed by shallow retracement highlights robust price structure that makes us confident to revise support base upward at 17800 as it is confluence of: a) 61.8% retracement of past two weeks up move (17452-18543) b) 20 days EMA is placed at 17838 which has been held since April 2021

In the coming session, the index is likely to open on a positive note tracking firm global cues. We expect the Nifty to maintain the higher high-low formation and head towards our earmarked target of 18600. Hence, use intraday dips towards 18490-18515 for creating long position for target of 18604

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 39684

Technical Outlook

* The daily price action formed a high wave candle which maintained higher high -low and a bullish gap below its base (39375 -39570 ) signaling continuation of the up trend .

* The index during previous week has logged a resolute breakout from past three week’s consolidation range (38300 - 36500 ) indicating acceleration of upward momentum that makes us confident of revising our target to 40500 levels as it is the confluence of the measuring implication of the last three weeks range breakout (38300 -36500 ) and the 138 . 2 % external retracement of the entire major decline of February - April 2021 (37708 -30406 ) placed at 40500 levels

* Despite elevated global volatility and surge in crude oil prices, index shown resilience by rallying to a fresh all time high .

* We expect the index to hold above the immediate support area of 38300 and any breather towards the same provides incremental buying opportunity

* Structurally, the formation of higher peak and trough in all time frames signifies robust price structure, that makes us confident to revise support base upward at 38300 levels as it is confluence of :

* The upper band of the last three weeks’ consolidation breakout area placed around 38300 levels

* 38 . 2 % retracement of the current up move 36877 -39374 is also placed around 38300 levels

* In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to continue with its positive momentum while maintaining higher high - low . Hence after a positive opening use intraday dips towards 39740 -39800 for creating long position for the target of 40040 , maintain a stoploss of 39630

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