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NSE (Nifty): 16563

Technical Outlook

* The Nifty started the week on a positive note and approached near our earmarked target of 16600. In the process, scaled a fresh all-time high of 16589. After an initial up move, the Nifty oscillated in 50 points range, highlighting stock specific action. As a result, daily price action formed a bull candle with shadows on either side, indicating continuance of positive bias amid elevated volatility

* The follow through strength post two months consolidation breakout backed by leadership in banking, IT and telecom, metals (which represent over 50% weightage in the Nifty) signifies inherent strength that makes us confident to revise our target to 16900 for coming month as it is 161.8% extension of mid June rally (15450-15962) projected from July high of 15962. In the process, bouts of volatility at higher levels after recent strong run up would offer incremental buying opportunity as buying on declines strategy has worked well over past 15 months. In the upcoming truncated week, we expect index to head towards our earmarked target of 16600

* Our preferred sectors are BFSI, IT & telecom, metals, realty and consumption

* On the stock front, in large caps we like TCS, Kotak Bank, HDFC, Bharti Airtel, Tata steel, Titan, Reliance while in the midcap space, we prefer, Mastek, Trent, Bharat Forge, Chambal Fertilizer, Escorts, Cummins, Radico Khaitan, Indocount Industries

* The Nifty midcap and small cap indices maintained the rhythm of not correcting for more than 10% while sustaining above 50 days EMA, since June-20. In current scenario as well, both indices arrested ongoing corrective phase near 50 days EMA after correcting 6% & 8%, respectively from their all time highs. We expect, broader market indices to undergo base formation above 50 days EMA that would set the stage for next leg of up move

* Structurally, The formation of higher peak and trough on the larger degree chart makes us confident to revise support base upward at 16100, as it is confluence of :a) Positive gap recorded on 4th August (16131-16176) b) Last week’s low is placed at 16162

In the coming session, the index is likely to open on a flat note tracking muted global cues. We expect index to trade with positive bias and endure its higher high-low formation. Hence use intraday dips towards 16490-16520 to create long for target of 16605.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 36094

Technical Outlook

* The daily price action formed a Doji candle with a higher high - low signalling consolidation . The index in the last eight sessions is seen forming a higher base above the recent eight weeks’ consolidation breakout area which also coincides with the falling supply line breakout area joining highs since February 2021 (placed at 35600 levels) highlighting strength

* Going ahead, we expect the index to maintain positive bias and gradually head towards the all -time high of 37700 levels in the coming month as it is the measuring implication of the recent range breakout (35800 -34000 ) . In the ongoing truncated week, we expect index to head towards our earmarked target of 36600

* In the last eight sessions the index has retraced less than 38 . 2 % of its previous five sessions up move (34115 -36219 ) . A shallow retracement post a sharp up move highlights a higher base formation and a robust price structure

* Structurally, the formation of higher peak and trough on the larger degree chart makes us confident to revise support base upward at 35000 as it is confluence of :

* (a) 61 . 8 % retracement of the current up move (34115 -36317 ) placed around 35000 levels

* (b) rising 10 weeks EMA placed around 35180 levels

* (c) The bullish gap area 4th August 2021 is also placed around 35200 levels

* Among the oscillators, the daily stochastic has rebounded from near the neutral reading of 50 and has generated a buy signal moving above its three periods average thus validates positive bias 

* In the coming session, index is likely to open on a flat note amid muted global cues . We expect the index to trade in a range with positive bias while holding above Friday low (35960 ) . Hence, use intraday dips towards 35990 -36050 , for creating

Nifty Bank Index – Daily Candlestick Chart

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