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NSE (Nifty): 18125

Technical Outlook

* The Nifty started the week on a positive note and underwent profit booking. However, buying demand in the vicinity of psychological mark of 18000 helped index to recoup most of intraday losses. As a result, daily price action resembles a hammer like candle, indicating supportive efforts emerged around 20 days EMA. Meanwhile, Nifty midcap and small cap extended corrective phase and approached their 50 days EMA

* Going ahead, follow through strength with a close above previous session high (18240) would confirm the pause in ongoing corrective phase and lead to a base formation in coming sessions, else prolonged consolidation amid stock specific action. Key point to highlight since May 2020 is that, on eight out of ten occasions supportive efforts emerged in the vicinity of 20 days EMA, highlighting elevated buying demand. Also, the index has not corrected for more than 3-4% since April 2021. In current scenario, past four sessions 3% decline hauled index near 20 days EMA, indicating limited downside. We expect index to maintain the same rhythm. Thus, any dip from here on towards 17800 should be capitalised on to accumulate quality stocks amid progression of Q2FY22 result season

* We believe, the broader market indices are approaching their price/time maturity. Since May 2020, the Nifty midcap and small cap indices have not corrected for more than 9-10% while sustaining around 50 days EMA and intermediate corrective phase has not lasted for more than 2-3 consecutive weeks. Over past two weeks, both indices have already corrected 9-10% from their life time high and approached near 50 days EMA, indicating possibility of time wise consolidation can not be ruled out which will help indices to form a higher base. Thus, focus should be on accumulating quality midcaps

* Structurally, the formation of higher peak and trough on the larger degree chart signifies inherent strength that makes us believe that ongoing breather would find its feet around 17800 as it is confluence of: a) 80% retracement of recent up move (17613-18604) b) past two week’s low is placed at 17839

In the coming session, the index is likely to open on a positive note tracking firm global cues. We expect index to hold Monday’s low (17968) and stage a pullback. Hence, use dip towards 18070-18100 for creating long position for target of 18189.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 41192

Technical Outlook

* The daily price action formed a bull candle with a higher high - low signaling continuation of the uptrend as it closed firmly above the 41000 levels .

* Going ahead, we expect the Bank Nifty to continue its outperformance over the Nifty and rally higher towards 42200 levels as it is the confluence of the 161 . 8 % external retracement of the entire major decline of February -April 2021 (37708 -30406 ) and the price parity of the previous up move (36876 -40011 ) as projected from the current week low (39293 ) signals upside towards 42200 levels

* Despite elevated global volatility and surge in crude oil prices, Bank Nifty has shown resilience by maintaining higher high - low in all time frame and rallying to a fresh all time high

* Index during previous week has completely retraced its three sessions breather in just a single session highlighting resilience and continuation of the up move

* Structurally, the formation of higher peak and trough in all time frames signifies robust price structure, that makes us confident to revise support base upward at 39200 levels as it is confluence of :

* 38 . 2 % retracement of the current up move 36877 -40587 is placed around 39200 levels

* The last week low is also placed around 39300 levels

* Weekly stochastic remain in uptrend and supports the positive bias in the index in the coming weeks

* In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to continue with its positive momentum while holding above 41000 levels . Hence after a positive opening use intraday dips towards 41250 -41310 for creating long position for the target of 41560 , maintain a stoploss of 41130.

Nifty Bank Index – Weekly Candlestick Chart

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