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NSE(Nifty):15834

Technical Outlook

* The Nifty started the week with a gap up opening and traded northward throughout the session. As a result, daily price action formed a bull candle carrying higher high-low, indicating elevated buying demand. In the process, the index maintained the rhythm of not correcting for more than three to four sessions in a row since mid-march 2021, highlighting inherent strength

* On expected lines, elevated buying demand emerged from the lower band of rising channel, highlighting broader up trend is intact. Going ahead, we expect the index to resolve out of upper band of past four weeks contracting range at 15900 and gradually head towards 16100 in coming weeks as we approach Q1FY22 earnings season. Our target of 16100 is based on following observations:

* a) price parity of post Budget rally (13597-15432), projected from April low of 14151, at 16055

* b) past two month’s range (15140-14150) breakout target at 16120

* Formation of subsequent higher lows over past four weeks highlights buying demand at elevated support base. Therefore, temporary dips from here on should be capitalised on as incremental buying opportunity as we do not expect the index to breach the key support zone of 15600-15500

* The relative outperformance of the small cap index endured as it scaled to fresh all-time high after couple of weeks consolidation at multiyear breakout area. Meanwhile, Midcap index extended healthy consolidation amid positive bias which would help index to form a higher base and ultimately make larger uptrend robust

* Structurally, the elevated buying demand highlights strong higher base formation at 15600-15500 zone, which we expect to hold as support zone of 15600-15500 is confluence of:

* a) 61.8% retracement of past four week’s rally (15145-15915), at 15440

* b) past three week’s low is placed at15450 In the coming session, index is likely to open on a flat note amid mixed Asian cues. We expect Nifty to trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip towards 15800-15830 to create long for target of 15914.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35212

Technical Outlook

* The daily price action resulted in a bull candle with a higher high - low and a bullish gap below its base signalling positive momentum after last week corrective decline . Strong buying demand in the last two sessions from 34500 levels highlights presence of strong support around 34500 -34000 levels

* Going ahead, we expect the index to trade with positive bias and head towards 36200 levels in the coming weeks as it is the confluence of the 80 % retracement of the February – April 2021 decline (37708 -30405 ) that coincide with price parity of late April swing (30405 -34287 ) as projected from the recent trough of 32115 

* On a smaller time frame the index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 - 35810 ) over past four weeks

* Key observation is price action has been contracting over past few sessions suggesting that breakout from this consolidation is approaching . We expect index to breakout on the higher side given shallow retracement and robust price structure.

* The formation of higher high -low in the weekly time frame gives us confident to maintain the support base at 34500 -34200 being the confluence of the following technical observations :

* (a) The 80 % retracement of the last five sessions up move (33908 -35576 ) placed at 34265 levels

* (b) The value of the rising demand line joining major lows since May 2020 is placed around 34450 .

* (c) The rising 50 days EMA is also placed at 34450 levels

* In the coming session, the index is likely to open on a flat note amid mixed Asian cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence use intraday dips towards 35180 -35250 , for creating long position for the target of 35480 , maintain a stoploss of 35070

* Among the oscillators the daily stochastic has generated a buy signal moving above its three periods average thus validates positive bias in the index

Nifty Bank Index – Daily Candlestick Chart

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