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Nifty : 19355

Technical Outlook

• The Nifty started the on a positive note and oscillated by 100 points range throughout the session. As a result, daily price action resulted into small bear candle confined within Friday’s trading range (19523-19303), indicating breather amid overbought condition formed due to past eight sessions 875 points rally

• Going ahead, we maintain our positive stance and expect Nifty to gradually head towards our earmarked target of 19700. However, we believe, couple of days breather after recent sharp up move would make market healthy. Key point to highlight is that, since March buy on dips strategy has worked well as Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity since we do not expect index to breach the key support threshold of 19100. In the process, stocks specific outperformance is expected to continue amid onset of earnings. Our target of 19700 is based on 138.2% external retracement of Dec-Mar decline 18887-16828.

• On the broader market front, the Nifty midcap and small cap indices have approached overbought conditions after past fourteen weeks >25% rally. Thus, bouts of volatility at higher levels can not be ruled out. Secondary correction is part of the structural up trend. Thus, dips in broader market should be capitalized to build a quality portfolio

• Structurally, the formation of higher peak-trough on the monthly chart signifies elongation of rallies that makes us confident to revise support base at 19100, as it is confluence of:

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 19123

• b) 50% retracement of current up move (18645-19523), at 19085

Nifty Bank: 44860

Technical Outlook

• The Daily price action formed a high wave candle with shadows on either side indicating intraday volatility . Index however maintained lower high -low for fourth session in a row indicating continuation of profit booking at life highs, indicating exhaustion of upward momentum as index rallied 17 % over past fifteen weeks .

• We expect index to consolidate in coming week amid positive bias in the 44000 -45500 range . Sustaining above last week high of 45500 would indicate resumption of upward momentum towards 46300 in July as it s 138 . 2 % external retracement of Dec -Mar decline (44151 -38613 ) . Buy the dips

• PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround

• From structural perspective, Bank Nifty has retraced its December – March decline in faster time . Hence any temporary breather from hereon would provide fresh investment opportunity to ride the uptrend

• The formation of higher peak and trough on the larger degree chart makes us confident to revise support base at 44000 as it is 61 . 8 % retracement of most recent up move from lows of 43300 and confluence of rising 50 day ema

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