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NSE(Nifty):15818

Technical Outlook

* The Nifty started the session on a positive note and approached the upper band of the consolidation (15900). However, profit booking in recently ran up stocks dragged the Nifty more than 100 points lower in the second half of the session. As a result, daily price action formed a Doji candle, indicating elevated volatility in the vicinity of all time high

* Going ahead, we reiterate our positive stance of as we expect the index to resolve out of upper band of past four weeks contracting range (15900) and gradually head towards 16100 in coming weeks. Key point to highlight is that, the Bank Nifty has regained upward momentum as it surpassed pivotal high (35575) and now gearing up to resolved above past six weeks consolidation (35800-33910). We believe, the rejuvenated momentum in Banking and IT ahead of Q1FY22 earnings season would help the Nifty resolve out of upper band of consolidation and head towards our target 16100 as it is:

* a) price parity of post Budget rally (13597-15432), projected from April low of 14151, at 16055 b) past two month’s range (15140- 14150) breakout target at 16120

* Formation of subsequent higher lows over past four weeks highlights buying demand at elevated support base. Therefore, we advise traders to take advantage of temporary breather to accumulate quality stocks for riding next leg of up move. In the process, we do not expect the index to breach the key support zone of 15600-15500

* In tandem with benchmark, Nifty small cap index saw profit booking after clocking a fresh all-time high. Meanwhile, Midcap index extended healthy consolidation amid positive bias. We believe, ongoing healthy retracement would help index to form a higher base and ultimately make larger uptrend robust

* Structurally, the elevated buying demand highlights strong higher base formation at 15600-15500 zone, which we expect to hold despite elevated volatility as it is confluence of:

* a) 61.8% retracement of past four week’s rally (15145-15915), at 15440 b) past three week’s low is placed at15450 In the coming session, index is likely to open on a subdued note on the back of muted global cues. We expect Nifty to attempt a pullback after initial decline. Hence, use intraday dip towards 15740-15762 to create long for target of 15848

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35579

Technical Outlook

* The daily price action resulted in a bull candle with a higher high -low signalling continuation of the up move for the third consecutive session . The index in the process completely retraced its last week decline in just three sessions signalling strength and resumption of the up move

* Going ahead, we expect the index to trade with positive bias and head towards 36200 levels in the coming weeks as it is the confluence of the 80 % retracement of the February – April 2021 decline (37708 -30405 ) that coincide with price parity of late April swing (30405 -34287 ) as projected from the recent trough of 32115

* On a smaller time frame the index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 - 35810 ) over past four weeks

* Key observation is price action has been contracting over past few sessions suggesting that breakout from this consolidation is approaching . We expect index to breakout on the higher side given shallow retracement and robust price structure

* The formation of higher high -low in the weekly time frame gives us confident to maintain the support base at 34500 -34200 being the confluence of the following technical observations :

* (a) The 80 % retracement of the last five sessions up move (33908 -35576 ) placed at 34265 levels

* (b) The value of the rising demand line joining major lows since May 2020 is placed around 34450 .

* (c) The rising 50 days EMA is also placed at 34500 levels

* In the coming session, the index is likely to open on a negative note amid soft Asian cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence use intraday dips towards 35350 -35420 , for creating long position for the target of 35640 , maintain a stoploss of 35240

* Among the oscillators the daily stochastic is in up trend thus validates positive bias in the index

Nifty Bank Index – Daily Candlestick Chart

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