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Nifty : 19597

Technical Outlook

* The Nifty started the session on a flat note and gradually drifted downward post outcome of RBI’s policy. As a result, the daily price action formed an inside bar, indicating extended breather

* The index is undergoing slower pace of retracement as over past three weeks Nifty retraced less than 50% of preceding four week’s rally (18646-19991). The lack of faster retracement on either side signifies prolongation of ongoing consolidation in the broader range of 19900-19200 that would make market healthy. In a secular bull market secondary correction in a common phenomenon. Thus, buying dips would be rewarding at current juncture as we believe key support is placed at 19200.

* The midcap index has clocked a fresh All time high, highlighting resilience despite profit booking in the benchmark. However, past five months remarkable >30% rally hauled weekly stochastic oscillator in overbought territory while breadth indicator (% of stocks above 200 DMA) has approached overbought condition (placed at 90), suggesting possibility of temporary breather at higher levels can not be ruled out. Thus, focus on accumulating quality stocks in a staggered manner.

* We believe, any extended breather from hereon would get anchored around key support of 19200 as it is confluence of:

* a) 61.8% retracement of current up move (18645-19991), at 19160

* b) 50 days EMA is placed at 19235

* c) July month’s low is placed at 19234

Nifty Bank: 44542

Technical Outlook

* The Nifty Bank Inde x extended profit booking as index failed to exhibit follow through strength to Wednesdays recovery . Index faced resistance around 45000 -45100 zone over past six sessions while 44300 is acting as a support which is also value of rising 50 -day ema

* Going forward, strength above 45000 range post inflation numbers would be a sign of meaningful recovery else consolidation to continue . Only a decisive breach below 44500 may lead to panic reaction towards 43300 -43500 in the short term

* Nifty Bank index is undergoing a corrective phase over past two weeks after strong 20 % rally from March lows which will help index to form a higher base and make the medium term uptrend healthy . Use dips as buying opportunity to ride structural uptrend

* PSU banking space is expected to continue relative outperformance

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