IGI Logo

Nifty

• The Nifty started the session on a subdued note tracking muted global cues. However, supportive efforts from 50 days EMA coincided with 80% retracement of the late November rally (18133- 18887) helping the index to recover 200 points from the day’s low of 18202. As a result, the daily price action resembles a hammer like candle, indicating buying demand from an elevated support base

• We expect the index to extend the ongoing consolidation (18700- 17900) and form a higher base wherein stock action would prevail. The past two week’s secondary correction helped the index to haul overbought conditions (weekly stochastic cooled off to 38 levels) and make markets healthy. Thus, any dip from here on should be capitalised on to accumulate quality stocks as we do not expect the index to breach the key support of 17900. Our structural positive bias is based on the following observations:

• a) since June 2022 lows, the index has not corrected for more than three consecutive weeks. With two week’s correction already in place, we expect the market to present a buying opportunity in the coming week

• b) India VIX has not seen a significant jump indicating low risk perception of market participants

• c) breadth in terms of percentage of stocks above 200 DMA has entered bullish trajectory (above 60%). Historically, on eight out of 10 occasions such rise in breadth has provided double digit returns over subsequent 12 months

• The ratio chart of Nifty 500/Nifty 100 has turned up from lower band of one year’s range, indicating outperformance of midcap/small caps. We expect both indices to relatively outperform and head gradually towards their respective highs

• Structurally, the formation of higher high-low on the monthly chart signifies elevated buying demand. We expect ongoing corrective phase to find its feet around 17900 as it is confluence of: a) 50% retracement of October-December rally 16748-18887 is at 17820, b) 100 days EMA is at 17820, c) November 2022 low is at 18959

• In the coming session, index is likely open on a positive note tracking firm global recovery. We expect, index to witness follow through strength to Tuesday’s hammer like candle and form a higher highlow. Thus, intraday dip towards 18410-18442 should be used to create intraday long positions for target of 18529

Nifty Bank

• The daily price action formed a bull candle as it opened lower and declined as the session progressed to form an intraday low (42956) in the midsession. The index however witnessed a sharp rebound in the second half as it recovered more than 450 points from the days low to close on a flat note signalling continuation of the overall consolidation after 18 % strong up move in the preceding 10 weeks . The index in the last three sessions is seen forming base around the 20 days EMA currently placed at 43198 levels

• Going ahead, we expect the index to continue with its healthy consolidation in the broad range of 41800 -44200 , which will help to cool off the overbought conditions in the weekly stochastic (currently placed at 72 ) and form a higher base above the major support area of 41800 . Thus, an extended breather from here on should not be seen as negative instead should be capitalised on as an incremental buying opportunity as the overall structure remain firmly positive

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength highlighting robust price structure

• The Bank Nifty has support at 41800 mark being the confluence of the (a) 38 . 2 % retracement of the last 10 weeks up move (37387 -44151 ) placed at 41580 (b) the 10 weeks EMA currently placed at 42346 levels (c) the upper band of the recent major range breakout area is also placed around 41800 levels

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer