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Nifty

• The Nifty started the eventful week with a positive gap 17786-17910 and continued to march northward during the week. As a result, it approached our intermediate target of 18100. The weekly price action formed a small bull candle carrying higher high-low, indicating continuance of positive bias

• Going ahead, we reiterate our constructive stance and expect the Nifty to challenge the all-time high of 18600 in coming couple of weeks. In the process, bouts of volatility owing to global uncertainty should be used as incremental buying opportunity as it will help short term indicators to cool off the overbought conditions. Our positive stance on the market is anchored upon following observations: a) breakout from 12 month’s falling trend line confirms conclusion of corrective bias, in turn, suggesting resumption of the primary up trend b) Over the past two decades, Q4 returns for the Nifty have been positive (average 11% and minimum 5%) on 15 out of 21 occasions (70%). History favours buying dips c) India VIX, which gauges market volatility, has recorded five month’s range breakdown and is trading below 16, indicating low risk perception among market participants d) Indian equities continued to relatively outperform their global peers, showing inherent strength e) US indices oversold: Percentage of stocks above 200-dma for S&P500 and Nasdaq has approached bearish extreme of 15 and 12. Over two decades, readings below 15 and 12 have led to meaningful durable bottoms. We therefore expect US indices to pose technical pull backs from oversold readings f) US Dollar/INR pair retreated from upper band of long term rising trend line placed at 83.30 while Dollar index has faced stiff resistance from decade long resistance trend line placed around 115

• Sectorally, we expect BFSI, PSU, Infra and Telecom to outperform. BSE PSU index logged a resolute breakout from decade long downward slanting channel, indicating structural turnaround

• On the stock front, our preferred large caps are Reliance Industries, SBI, Bajaj Finserv, Coal India, TCS, Hindalco, L&T, Tata Motors, Adani Ports while preferred midcaps are Concor, Union Bank, Action Construction, Torrent Pharma, Jindal Stainless, Cochin Shipyard, Indian Hotels

• Structurally, breakout from one year falling trend line confirms structural improvement that augurs well to revise support base at 17500 as it is 50% retracement of past three week’s rally 16950-18178

• The Nifty midcap index resolved out of five weeks base formation above 100 days EMA. We expect, broader market indices to accelerate upward momentum and witness catch up activity against the Nifty amid advancement of earning season

• In the coming session, index is likely to witness gap up opening tracking buoyant global cues. We expect index to maintain higher high-low formation and endure its positive momentum. Hence, use dips to create intraday long positions in the range 18189-18221 for target of 18307

Nifty Bank

• The weekly price action formed a Doji candle with shadows in either direction signaling consolidation after recent strong up move of 11 % in the preceding five weeks

• Going forward, we reiterate our positive stance as we expect the index to surpass the all -time high (41840 ) and extend the current up move towards 42900 levels in the coming weeks being the 123 . 6 % external retracement of the recent breather (41840 -37386 ) . Dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunity

• Nifty PSU banking stocks continue to outperform and the PSU bank index has recently posted a resolute breakout above CY21 highs and past five years down trend line indicating strong structural uptrend . While large caps have seen strong traction, we expect smaller PSU banks to catch - up and witness strong upward momentum .

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength . It has recently generated a faster retracement on higher degree as eight month’s decline (41829-32990) was completely retraced in just two and half months highlighting robust price structure

• The Bank Nifty has support at 39800 mark being the confluence of the (a) 38 . 2 % retracement of the last four weeks up move (37387 -41677 ) placed at 39850 (b) the 10 weeks EMA currently placed at 39850 levels

• In the coming session, index is likely to open on a positive note amid firm global cues. We expect the index to trade with positive bias while maintaining higher high -low. Hence, after a positive opening use intraday dips towards 41380 -41460 for creating long position for the target of 41730 with a stoploss at 41270

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