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Nifty

Technical Outlook

The Nifty started the monthly expiry week on a positive note and subsequently witnessed range bound activity. As a result, weekly price action formed a small bull candle carrying higher high-low, indicating continuance of positive bias

We reiterate our positive stance and expect the Nifty to gradually head towards 18100 in coming week amid progression of earnings season. Structurally, our constructive bias remains intact. This makes us confident that the index will resolve above 18100 mark and eventually head towards 18600 by December 2022. Hence, a temporary breather from here on should be used as buying opportunity as we do not expect key support of 17300 to be breached. Our positive stance is based on following observations: a) breakout from past three week’s consolidation (17500- 16900) augurs well for heading towards implied target of 18100, b) historically, 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 from here on, c) Indian equities continued to outperform their global peers, showing inherent strength, d) Dollar index has registered breakdown from four weeks range while US Dollar/INR pair retreated from upper band of long term rising trend line placed at 83.30. Going ahead, further cool off in Dollar index would provide stability in rupee against US dollar and support Indian equities in coming weeks, e) Russell 2000 index has resolved out of four week’s base formation, indicating rejuvenation of upward momentum. We believe Nifty midcap index has undergone strong base formation and expect catch up activity

Sectorally, we expect BFSI, IT, Capital Goods, Consumption and PSU to outperform

Our preferred large caps are State bank of India, Kotak Mahindra Bank, Maruti, Reliance Industries, Infosys, Titan, Coal India, Sun Pharma while preferred midcaps are CUB, Bank of Baroda, Concor, Granules, Coforge, ABFRL, HAL, SCI, VIP, Cummins India

Structurally, formation of higher high-low on the weekly chart signifies revival in upward momentum that makes us confident to retain support base at 17300 as it is confluence of: a) 50% retracement of past two weeks rally 16950-17811 b) 50 days EMA is placed at 17355

Broader market indices have formed a higher base above 100 days EMA. We expect, the Nifty midcap and small cap indices to resolve higher and witness catch up activity against Nifty amid advancement of earning season

In the coming session, index is likely to witness gap up opening tracking firm global cues. We expect index to resolve out of four sessions range 17840-17640 and endure its northbound journey. Hence, use dips to create intraday long positions in the range 17890-17922 for target of 18009.

Bank Nifty

Technical Outlook

The weekly price action formed a small bear candle as it started the week on a positive note . However, profit booking at higher levels saw the index gave up its gain to close the week marginally higher .

Going forward, we reiterate our positive stance and expect the index to surpass the all -time high (41840 ) and extend the current up move towards 42900 levels in the coming month 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

Amongst momentum oscillators, weekly stochastics remain in uptrend and has recently generated a buy signal thus supports the positive bias in the index • 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 - 41530 ) placed at 39850 (b) the 20 days EMA currently placed at 40030 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 . Hence after a positive opening use intraday dips towards 41120 - 41190 for creating long position for the target of 41460 with a stoploss at 41010

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