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Nifty

• The Nifty started the week on a flat note. However, supportive efforts from 80% retracement of late November rally (18133-18887) coincided with 50 days EMA around 18200 helping the index to end above 18400. The daily price action formed a bull candle carrying a higher high-low, indicating buying demand from elevated support base

• Going ahead, we expect the index to extend ongoing consolidation amid stock specific action wherein strong support is placed at 17900. Meanwhile, the past two week’s high of 18700 would act as key resistance. We believe the ongoing healthy retracement of preceding nine week’s rally (16750-18887) would help the index to cool off from overbought conditions (weekly stochastic hauled to 40 levels) and subsequently form a higher base paving the way for the next leg of the up move. Our structural positive bias is based on following observations:

• a) since June 2022 lows, the index has not corrected for more than three consecutive weeks. With two weeks 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 breadth thrust 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 range, indicating outperformance of Mid/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 placed at 17820 b) 100 days EMA is placed at 17800 c) November 2022 low is placed at 18959

• In the coming session, index is likely open on a flat note amid subdued global cues. The supportive efforts in the vicinity of 50 days EMA placed around 18200 signifies elevated buying demand. Thus, intraday dip towards 18415-18445 should be used to create intraday long positions for target of 18529

Nifty Bank

• The daily price action formed a hammer like candle at the 20 days EMA currently placed at 43178 levels signaling evaluated buying demand . The index overall in the last two weeks is seen consolidating after 18 % strong up move in the preceding 10 weeks .

• Going ahead, we expect the index to undergo a 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 78 ) 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 41980 levels (c) the upper band of the recent major range breakout area is also placed around 41800 levels

In the coming session index is likely to open on a flat to negative note tracking soft global cues . In today’s session, we expect the index to continue with its consolidation around the 20 days EMA placed around 43180 . Hence, use intraday dips towards 43270 -43350 for creating long position for a target of 43570 , with a stop loss of 43160 .

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