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NSE (Nifty):14865

Technical Outlook

* The Nifty started the session with a positive gap (14653-14695) and inched northward throughout the session as intraday pullbacks were bought into. As a result, index hit the upper band of the falling channel on expected lines thereby surpassed our target of 14800. The daily price action formed a bull candle carrying higher high-low, highlighting elevated buying demand

* Going ahead, a decisive close above Wednesday’s high of 14890 will confirm the breakout from falling channel, leading to acceleration of upward momentum, else extended consolidation with positive bias. Stock specific action would prevail amid progression of Q4FY-21 result season. In the process, we expect broader market would outperform

* Key point to highlight is that, past four sessions’ 740 points up move helped index to retrace more than 80% of preceding 8 sessions decline (14984-14151). The faster pace of retracement signifies structural improvement that augurs well for next leg of up move. Therefore, any temporary cool off from here on should be capitalised as an incremental buying opportunity in quality large and midcaps

* The small cap index has shown resilience as it approached the vicinity of 52 weeks high compared to Nifty and Nifty midcap which is 4% and 2% away, respectively. We believe past two month’s consolidation has helped Nifty midcap and small cap indices to form a higher base above its 50 days EMA, which has been held since June 2020, highlighting inherent strength. We expect both indices to challenge their 52 weeks high and eventually accelerate its relative outperformance against benchmark in coming weeks

* Structurally, we believe any dip from here on would get anchored around 14200 as it is confluence of 100 days EMA is placed at 14200 coincided with last week’s low is placed at 14151 In the coming session, index is likely to witness gap up opening tracking firm Asian cues. We expect index to trade with a positive bias amid elevated volatility owing to monthly expiry. Hence, use intraday dip towards 14850-14875 to create long for target of 14964.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 33722

Technical Outlook

* The daily price action formed a strong bull candle which maintained higher high -low for a fourth consecutive session . Index in line with our expectation has witnessed a strong pullback of more than 3000 points in the last one week (strongest in the entire last two months decline) and in the process registered a breakout above the falling channel containing entire decline signalling end of corrective phase and resumption of the primary uptrend

* Going ahead, we expect the index to maintain positive bias and gradually head towards 34900 levels in the coming weeks as it is the 61 . 8 % retracement of the entire decline (37708 -30405 )

* The last five sessions strong up move has lead to daily stochastic into overbought territory with reading of 93 , so some profit booking at higher levels can not be ruled out . We believe that it should not be seen as negative instead it should be utilised to accumulate quality banking stocks for up move towards 34900 levels

* The index maintained the rhythm of not correcting more than 20 % as witnessed since March 2020 . In the current scenario it rebounded after correcting 19 % from the all -time high (37708 ) . Hence it provides favourable risk -reward setup for the next leg of up move

* The index has immediate support at 32000 levels being the confluence of the current week low and the 50 % retracement of the current up move (30405 -33777 ) . While the major support is placed in the range of 30500 -30000 levels

* In the coming session, the index is expected to open gap up on the back of firm Asian cues . We expect the index to continue with its recent pullback and continue to form higher high -low amid expiry lead volatility . Hence, after positive opening use dips towards 33710 -33780 for creating long position for the target of 33990 , maintain a stoploss of 33590

Nifty Bank Index – Daily Candlestick Chart

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