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NSE (Nifty):15109

Technical Outlook

* Equity benchmarks snapped their six session’s winning spree and ended Tuesday’s session on a flat note at 15109, down 6 points. The market breadth tilted in favour of declines with A/D ratio of 1:1.4. Barring financials, all other sectors ended in red weighed by auto, pharma, metal.

* The Nifty started the session on a positive note and scaled a fresh alltime high of 15257. However, profit booking in the second half of the session pared initial gains. As a result, daily price action formed a small bear candle with shadows on either side, indicating stock specific action amid rise in volatility •

* The formation of higher high-low signifies prevailing up trend is intact, which makes us confident that index would maintain its positive momentum and gradually head towards our earmarked target of 15500 in coming month. Key point to highlight is that, past seven sessions 1660 points rally in Nifty hauled the daily stochastic oscillator in overbought territory (at 90), indicating a couple of days temporary breather cannot be ruled out.

* However, we believe for a temporary breather to materialise the index needs to decisively close below previous sessions' low (15064) else continuation of positive bias amid stock specific action as we expect broader market to relatively outshine the benchmark amid ongoing Q3FY21 result season. Thus, capitalising on dips to go long in quality large cap and midcap would be the prudent strategy to ride next leg of rally towards 15500, as it is 161.8% external retracement of past two week’s fall (14754-13596), at 15466

* The Nifty midcap and small cap indices are sustaining well above their January swing high post witnessing faster pace of retracement which augurs well for further acceleration of relative outperformance. The Nifty Midcap index has recorded a fresh all-time high, whereas small cap index is still ~20% away from all-time high. Therefore, we expect small caps to witness catch up activity

* Structurally, we do not expect the index to breach the key support threshold of 14600. Hence, any temporary breather from here on should not be construed as negative. Instead, it should be capitalised on to accumulate quality midcap and small cap stocks as we expect elevated buying demand to emerge around 14600, since it is confluence of 38.2% retracement of current up move (13597-15257), placed at 14622 coincided with earlier consolidation breakout area around 14650

* In the coming session, we expect index to trade with a positive bias while sustaining above Tuesday’s low (spot-15064). Hence, use intraday dips towards 15100-15122 to create long position for the target of 15209.

NSE Nifty Daily Candlestick Chart

Bank Nifty: 36056

Technical Outlook

* The Nifty Bank index traded in a range with positive bias and closed marginally higher on Tuesday to gain for the ninth consecutive session on the back firm global cues . Private banking index closed marginally higher, whereas the PSU banking stocks witnessed profit booking for the second consecutive session after last weeks strong up move . The Bank Nifty closed at 36056 up by 73 points or 0 . 2 % 

* The daily price action formed a second consecutive high wave candle as the index continue to consolidate inside Friday’s high -low range highlighting range bound trade while maintaining positive bias .

* Going ahead, we expect the index to maintain its overall positive stance and head towards 36700 in coming weeks while elevated support is now being placed at 33900 levels .

* However, after a rally of 6900 points in just two weeks the daily stochastic has approached to overbought trajectory with reading of 81 . Hence intermediate profit booking at higher levels cannot be ruled out and one should adopt buy on decline strategy as the overall structure remain firmly positive for up move towards 36700 levels as it is the 123 . 6 % external retracement of entire CY20 decline (32613 - 16116 )

* We are confident in revising support upwards at 33900 mark which is the confluence of the following : a) 38 . 2 % retracement of the current up move 29687 to 36615 is placed around 33968 levels b) Value of a bullish gap post Budget day at 33583 levels c) The value of the rising trendline joining recent high since November 2020 is also placed around 34200 levels

* In the coming session, the index is likely to open on a positive note tracking firm Asian cues . We expect index to trade with a positive bias while holding above Tuesday low (35639 ) . Hence , after a positive opening we recommend to utilize intra day dips towards 35830 -35890 create fresh long positions in Bank Nifty February Futures to for target of 36090 meanwhile stop loss is placed at 35720

Bank Nifty Index – Daily Candlestick Chart

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