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Nifty

Technical Outlook

• The Nifty started the week on a positive note as a result it witnessed follow through strength post three weeks consolidation (17500-16700). The daily price action formed a small bear candle after witnessing gap up opening (17576-17736), indicating continuance of positive bias.

• We reiterate our positive stance and expect Nifty to gradually head towards 18100 in coming weeks amid progression of earnings season. However, in the upcoming truncated week stock specific action would prevail amid rise in volatility owing to monthly derivatives expiry week. Our positive stance on the market is based on following observations: a) The breakout from three weeks consolidation (17500-16700) along with broader participation and relative outperformance against global peers augurs well for extension of ongoing up move b) The BFSI space, which carries more than 36% weightage in Nifty, is expected to outperform as rallies are quicker and stronger while corrections are shallow, underpinning inherent strength. Within the banking space, Nifty PSU bank index posted resolute breakout above CY21 highs and past five year down trend line indicating strong structural uptrend. While large caps have seen strong traction, we expect smaller PSU banks to catchup and witness strong upward momentum in coming weeks. c) US Dollar/INR pair has approached key trend line resistance around 83.30 mark. Since 2015 on multiple occasions pair has reversed lower from this trend line amid extreme overbought readings on weekly timeframe. We expect US dollar to soften from this key hurdle which will support bullish sentiment for domestic equities D) India VIX (which gauge the market volatility) continued to drift downward over fourth week in a row as it declined ~6% to settle around 17 mark, indicating low risk perception among market participants

• Sectorally, BFSI, IT, Capital goods, PSU and Telecom are expected to lead the gains

• Our preferred large caps are State bank of India, Axis bank, Reliance Industries, Bharti Airtel, Infosys, ITC, Titan, Ambuja Cement, Coal India, Dr Reddy while preferred midcaps are CUB, Bank of Baroda, Concor, Coforge, TTK Prestige, IRCTC, Bharat Dynamics, Jamna Auto, SCI, Trent

• Structurally, over past three weeks on multiple occasions elevated buying demand emerged from 200 days EMA placed around 17000 mark, indicating inherent strength amid elevated global volatility. Thereby, we revise our support to 17300 as it is confluence of: a) 50% retracement of past two weeks rally 16950-17670 b) 50 days EMA is placed at 17290

• Broader market indices have bounced after forming a higher base above 100 days EMA. We expect the Nifty midcap and small cap indices to witness catch up activity against Nifty as they are poised to surpass their three week highs, amid advancement of earning season

• In the coming session, index is likely to open on a positive note tracking firm global cues. We expect index to maintain higher high-low formation amid elevated volatility owing to monthly derivative expiry week. Hence, use dips to create intraday long positions in the range 17725-17760 for target of 17843.

Bank Nifty

Technical Outlook

• The weekly price action formed a strong bull candle with a higher high -low signaling continuation of the up move . The index started the week on a positive note and gained as the week progressed to close near the high of the week

• Going forward, we expect the index to surpass the all -time high (41840 ) and extend the current up move towards 42900 levels in the coming weeks being the 123 . 6 % external 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 opportunity

• Nifty PSU banking stocks continue to outperform and the PSU bank index has posted a resolute breakout above CY21 highs and past five years down trend line indicating strong structural uptrend . While large caps have seen strong traction, we expect smaller PSU banks to catch -up and witness strong upward momentum

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength . It has recently generated a faster retracement on higher degree as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting robust price structure

• The Bank Nifty has support at 39800 mark being the confluence of the (a) last Thursday’s swing low (b) presence of 20 days EMA at 39776 levels and (c) the 38 % retracement of the last three weeks up move (37387 -41427 ) placed at 39800

• Amongst momentum oscillators, weekly stochastics has generated a buy signal near the neutral reading of 50 thus supports the positive bias in the index

• 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 maintaining higher high -low . Hence after a positive opening use intraday dips towards 41250 -41330 for creating long position for the target of 41570 with a stoploss at 41130

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