IGI Logo

Nifty : 19745

Technical Outlook

• The Nifty started the week on a positive note and gradually inched towards 20000 mark. However, profit booking in the index heavy weights during Friday’s session led index to par some of weekly gains. As a result, weekly price action formed a bull candle with an upper shadow, highlighting profit booking near psychological mark of 20000.

• Going ahead, follow through strength above last week’s high of 19991 would lead to an extension of rally towards 20200. Failure to do so would lead index to undergo healthy consolidation in 20000-19500 range ahead of FOMC meet and monthly expiry week amid progression of earning season. Key point to highlight is that, over past fifteen sessions Nifty has rallied >1100 points which hauled daily and weekly stochastic oscillator in overbought conditions, indicating possibility of extended profit booking in recently run up stocks can not be ruled out. Thus, dips should be utilised to accumulate quality stocks as strong support for the Nifty is placed at 19500. Our positive bias is further validated by following macros:

• A) Globally, key development was a breakout in DJIA and Russell2000 (Small cap index) from seven-month consolidation amid onset of earnings. Indian midcaps have positive correlation with developed markets midcap indices in long run

• B) The USD/INR pair is on the verge of contracting triangle breakdown placed around 82

• C) FII’s inflows have remained persistent amid weakness in US Dollar index

• On the broader market front, Nifty midcap recorded a fresh All Time High while small cap is still 4% away from its lifetime highs. The current up move is backed by sturdy market breadth as currently 79% stocks are trading above 200 DMA, highlighting inherent strength

• Sectorally, BFSI, PSU, Pharma, Consumption are expected to do well. Especially, consumer discretionary is at extremely favourable risk-reward set up as relative ratio chart of BSE Consumer discretionary against BSE Sensex has approached lower band of past five years upward slopping channel. We expect the sector to bottom out in coming months.

• On stock front, in large cap we prefer HDFC Bank, SBI, TCS, Tata Motors, United Spirits, Divi’s Laboratories, L&T, Grasim while in midcap Alkem, AIA Engineering, Zensar Tech, BEML, Indiamart, GMDC, Bank of Maharashtra, Gabriel will remain in focus

• Structurally, since March buy on dips strategy has continued to fare well as Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity. Thus, we revise our support base upward at 19500, being confluence of:

• A) 38.2% retracement of current up move (18645-19991), at 19478

• B) 20 days EMA is placed at 19425

• C) Since March index has not closed below previous weeks low. Last week’s low is placed at 19562

Nifty Bank: 46075

Technical Outlook

• The Weekly price action formed strong bullish candle after two week breather and led index to new life highs .

• We maintain positive bias in the index and expect it to gradually head towards 46800 levels as it continues with higher high -low formation on multiple time frames . Use dips as a buying opportunity

• Structurally, PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround . Correction in PSU stocks remains a buying opportunity

• Key short term support is now being revised upwards to 45200 being last Tuesday’s low that coincides with rising 20 -day ema which has been held on multiple occasions since March 2023

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