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Nifty: 18265

Technical Outlook

• The Nifty started the session on a positive note although failed to sustain gains and settled flattish amid stock specific action ahead of Karnataka polls outcome and US CPI numbers. The Daily price action formed a small bear candle, indicating breather after Monday’s sharp up move as prices failed to sustain above 18300. Midcap space also witnessed some cool off after sharp rally

• Going ahead, we expect index to gradually head towards 18500 in non linear fashion. While some profit taking at higher levels and volatility around US inflation data cannot be ruled out, temporary breather from hereon should be used to accumulate quality stocks from positional perspective Structurally, our positive bias is based on following observations:

a) formation of higher peak and trough on the weekly chart post inverted head and shoulder breakout, signifies elevated buying demand

b) the percentage of stocks above 200 days EMA for the Nifty 500 universe have jumped to 55% compared to end of March reading of 40%, indicating improvement in broader market participation

c) Brent crude prices approached lower band around $70 which is a key support level. We expect, upsides to be short lived with immediate hurdle at $80 d) FII’s inflows have remained persistent amid weakness in US Dollar index

• The broader market indices endured their upward momentum as Nifty midcap, small cap maintained higher high-low formation on the weekly chart. Thus, broader market should be in focus amid progression of earning season

• Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us confident to retain support base at 17800-17700 as it is 80% retracement of last week’s rally (17554-18267) coincided with rising 20-days ema (17863)

• In the coming session, the index is likely to open on a positive note amid mixed global cues. We expect the index to continue with its positive momentum while holding above 18200 levels. Stock specific action will remain in focus. Hence, create long position in the range of 18275-18308 for the target of 18387, maintain stoploss at 18237

Nifty Bank: 43198

Technical Outlook

• The daily price action formed a small bear candle as it opened higher and formed an intraday high of 43533 in the midsession . The index however gave up its gains and closed the session marginally lower signalling consolidation after Monday’s up move ahead of the US CPI numbers

• Going ahead, we expect the index to surpass the immediate hurdle of 43500 and gradually head towards the all time high placed around 44100 levels in the coming weeks . Key support on the downside is placed at 41800 levels, we believe corrective dips towards the support area should be used as a buying opportunity

• 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 key support at 41800 levels being the confluence of the recent major breakout area and the 38 . 2 % retracement of the last five weeks up move (38613 -43739 )

• 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 .

• In the coming session, the index is likely to open on a flat note amid mixed global cues . Index in today’s session is likely to consolidate its recent gains while holding above 43000 levels . Hence, use intraday dips towards 42990 -43070 for creating long position for the target 43330 , maintain a stoploss of 42880

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