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Nifty

Technical Outlook

The Nifty started the session with a positive gap (17487-17568) and approached intermediate resistance around 17600. Subsequently, it retreated from the day’s high amid rupee depreciation. As a result, daily price action formed a small bear candle carrying a higher high-low, indicating breather at higher levels

Going ahead, we expect the index to resolve higher and gradually head towards psychological mark of 18000 in coming weeks. However, a move towards 18000 would be in a non-linear fashion. Key point to highlight is that, past four session’s 650-point up move hauled daily stochastic oscillator in overbought conditions at 90, indicating possibility of a couple of days breather cannot be ruled out. Yet, such a breather should not be construed as negative. Instead, dips should be used as a buying opportunity amid progression of Q2FY23 earning season. Our positive view on the market is further validated by following observations:

a) historically, over the past two decades, Q4 returns for Nifty has been positive (average 11% and minimum 5%) on 15 out of 21 occasions (70%). The history favours buying dips from here on

b) US dollar/INR pair has approached key trend line resistance around 83.30 mark. Since 2015, on multiple occasions, the pair has reversed lower from this trend line amid extreme overbought readings on weekly timeframe. Stability in the rupee against the US dollar would support Indian equities in coming weeks

Structurally, despite rise in volatility, the index managed to hold the psychological mark of 17000, indicating inherent strength amid elevated support base. Thereby, we revise our support to 17100-17000 zone it is confluence of: a) 100 days EMA is placed at 17112 b) current week’s low is placed at 17098

Broader market indices have bounced after forming a higher base above 100 days EMA. We expect the Nifty midcap and small cap indices to hold their September lows and stage a pullback in coming weeks amid commencement of earning season

In the coming session, index is likely to open on a subdued note tracking muted global cues. We expect volatility to remain high amid weekly expiry session. Hence, after initial decline use dips to create intraday long positions in the range 17300-17332 for target of 17417

Bank Nifty

Technical Outlook

The daily price action formed a high wave candle with a higher high -low . The index opened on a positive note however profit booking at higher levels saw the index gave up some of its intraday gains and closed marginally higher

Going forward, we expect the index to maintain positive bias and head towards 40800 levels in coming sessions being the measuring implication of the recent six sessions consolidation range breakout area and the 80 % retracement of the recent breather (41840 -37386 ) . Dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunit

 Structurally, on the longer time frame the index has already posted faster retracement on higher degree as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting end of major corrective phase and structural improvement . Hence ongoing retracement of June -September rally should not be construed negative rather would make overall trend healthie

Amongst momentum oscillators, weekly stochastics has generated a buy signal near the neutral reading of 45 thus supports the positive bias in the index

The Bank Nifty has key immediate support at 38500 mark being the confluence of the last week low and the 61 . 8 % retracement of the current up move (37387 -40435 )

In the coming session, index is likely to open on a soft note amid weak global cues . We expect the index to trade in a range while consolidating its recent gains . Hence use intraday dips towards 39890 -39970 for creating long position for the target of 40230 with a stoploss at 39780

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