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Nifty: 18090

• The Nifty started the session on a negative note tracking subdued global cues and traded in a 75 points range throughout the session. As a result, daily price action formed a small bear candle carrying lower high low, indicating temporary pause in upward momentum

• The index has rallied 1350 points over past five weeks that hauled daily and weekly stochastic in overbought conditions (placed at 90 and 88, respectively), indicating possibility of couple of days breather amid Fed meet outcome can not be ruled out. However, any dip from here on should not be construed as negative. Instead capitalise it to accumulate quality stocks in a staggered manner as we expect index to gradually resolve higher and head towards 18300 in coming weeks. Our constructive view is further validated by following observations:

a) the formation of higher peak and trough on the weekly chart post inverted head and shoulder breakout, signifies inherent strength that augurs well for next leg of up move

b) the percentage of stocks above 200 days EMA for the Nifty 500 universe have jumped to 52% compared to march reading of 40%, indicating improvement in broader market participation

c) global key monitorable like dollar index breaking below the 100 mark or Brent prices continuing their downtrend towards $70 would act as important tailwinds for domestic markets

• The Nifty midcap and small cap indices endure its northbound journey while maintaining higher high-low formation, indicating continuance of positive momentum despite profit booking in the benchmark. We expect, catchup activity in midcap/small cap segment to continue in coming weeks backed by stronger breadth readings and sectoral churn amid progression of earning season

• Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us confident to revise support base at 17700 as it is 80% retracement of last week’s rally (17554-18089) coincided with rising 20-days ema (17744)

• In the coming session, index is likely to open on a muted note tracking subdued global cues. After initial blip, we expect index to find support from 18050 mark and stage a rebound. Hence, use intraday dip in May future towards 18050-18083 to create intraday long positions for target of 18164 with a stoploss of 18013.

Nifty Bank: 43312

* The index started the session on a soft note and formed an intraday low of 43078 in the opening trade . The index however recovered as the session progressed and closed the session marginally lower resulting in a small bull candle with a lower high -low indicating breather amid positive bias

* Going ahead, index sustaining above the resistance area of 43000 -43300 will signal further acceleration of uptrend and gradually lead index towards the all time high of 44150 levels in the coming weeks . However, we expect the up move to be in non -linear fashion with bouts of volatility cannot be ruled out as weekly stochastics has reached overbought reading of 94 after 5000 points rally in five weeks

* However, for any signs of pause in the upward momentum the index need to start forming lower high -low in daily chart . We believe the action could shift from private banks to public banks and from large banks to smaller banks as earnings season progresses

* Structurally, combination of faster retracement of last falling segment with monthly higher high -low signifies improvement in price structure and therefore supports buying dips strategy

* On relative terms, Bank Nifty continues to outperform the Nifty . The Bank Nifty/Nifty ratio line continues to trend higher and sustaining above the major breakout area signalling extended period of outperformance

* The index has immediate support at last week’s low of 42400 that coincides with rising 10 -day average (around 42600 ) which has been held throughout month of April 2023

* In the coming session, the index is likely to open on a soft note amid weak global cues . We expect the Index to consolidate with positive bias after recent sharp up move . Hence use intraday dips towards 42990 -43070 for creating long position for the target 43330 , maintain a stoploss of 42880

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