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Nifty (17214)

Technical Outlook

• The Nifty started the week on a subdued note and drifted downward as intraday pullback remained short lived. As a result, the index closed near intermediate support of 17200. The daily price action formed a bear candle carrying lower high-low, indicating extended corrective bias

• The lack of faster retracement of either side signifies prolonged consolidation (17500-16800) amid stock specific action that would make market healthy. Over the past three sessions, the index has retraced 61.8% of preceding five session’s up move (16836-17794), indicating lack of faster retracement. Going ahead, we expect buying demand to emerge around key support zone of 17000-16800. Thus, extended correction from hereon should not be construed as negative. Instead dips should be capitalised on to accumulate quality stocks. In the process, stock specific action would prevail as the earnings season progresses

• Historically, in a secular bull market, the breadth indicator based on percentage of stock above 200 DMA of Nifty 500 constituents does not go below its bullish support zone of 50 levels and, subsequently, stages a decent up move. In the current scenario, this sentiment indicator bounced from a reading of 50. Thus, we expect the index to witness revived buying demand at elevated support base.

• Structurally, despite recent elevated volatility Nifty managed to hold the sky support threshold of 16800 which we do not expect it to breach as it is confluence of :

• A) 80% retracement of December-January rally (16410-18350), placed at 16798

• B) Panic low recorded in January 2022 is placed at 16836

• In tandem with benchmark broader market indices underwent extended profit booking. The Nifty midcap and small cap indices have been forming a higher base formation above 100 days EMA, highlighting robust price structure. We believe ongoing consolidation would make broader market heathy and pave the way for next leg of up move

• In the coming session, index is likely to open on a flat note tracking mixed global cues. The formation of lower high-low signifies corrective bias. Hence use intraday pullback towards 17300-17330 for creating short position for target of 17213

Nifty Bank: 37995

Technical Outlook​​​​​​​

• The daily price action formed a bear candle with a lower high -low signaling continuation of the corrective decline for the third consecutive session after recent strong up move of 3000 points in just six sessions

• The last three sessions profit booking is seen as healthy retracement of recent run up and therefore should not be construed as negative . Instead dips towards 37500 -37000 levels should be capitalised on to accumulate quality banking stocks for the next up move towards 40300 levels in coming weeks being the confluence of the 80 % retracement of the November -December 2021 decline (41829 -34019 ) and the 161 . 8 % external retracement of the recent breather (38855 -36375 )

• The index has immediate support at the 37500 -37000 levels being the confluence of the 100 days EMA (currently at |37214 ) and the 61 . 8 % & 80 % retracement of the previous up move (36375 -38802 )

• Bank Nifty/Nifty ratio chart has started forming higher high - low in weekly time frame and is seen reversing from last one year falling channel highlighting resumption of Bank Nifty outperformance in relative to Nifty

• Among the oscillators the weekly 14 periods RSI is seen rebounding taking support at its nine periods average thus validates positive bias in the index

• In the coming session, index is likely to open on a flat note amid mixed global cues . The index is expected to trade in a range with corrective bias as forming lower high -low in daily chart . Hence use pullback towards 38240 -38290 for creating short posi

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