IGI Logo

Nifty : 19332

Technical Outlook

• The Nifty started the week with a positive gap (19189-19246) and recorded fresh All Time High of 19523. However, profit booking in recently run up stocks from the higher levels amid volatile global cues lead index to par some of intra-week gains. Consequently, weekly price action resulted into small bull candle carrying higher high-low, indicating continuance of positive bias

• We reiterate our positive stance and expect Nifty to gradually head towards our earmarked target of 19700. However, bouts of volatility owing to volatile global cues amid overbought conditions can not be ruled out. Key point to highlight is that, 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 since we do not expect index to breach the key support threshold of 19100. In the process, stocks specific outperformance is expected to continue amid onset of earnings. Our target of 19700 is based on 138.2% external retracement of Dec-Mar decline 18887-16828.

• On the broader market front, Nifty midcap recorded a fresh All Time High and small cap index closed at 15 months high. The current up move is backed by sturdy market breadth as currently 77% stocks are trading above 200 DMA, highlighting inherent strength

• Sectorally, IT, Auto, PSU, Pharma would remain in focus. Key point to highlight is that, Nifty PSU banking index has approached near multi year highs. We expect, PSU bank index to give multi year breakout and rally 15%-20% over next few months and relatively outperform

• On stock front, in large cap we prefer Axis Bank, SBI, Reliance Industries, Infosys, Hindalco, BEL, Tata Motors, Sun Pharma, Titan, DLF, IOC while in midcap Granules, Union Bank, Hind Oil Exploration, Graphite, Coforge, KPR Mills, Bhel, Brigade, NCC, EIH Ltd, Engineers India, Apollo Tyres will remain in focus

• Structurally, the formation of higher peak-trough on the monthly chart signifies elongation of rallies that makes us confident to revise support base at 19100, as it is confluence of:

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 19123

• b) 50% retracement of current up move (18645-19523), at 19085

Nifty Bank: 44925

• The weekly price action formed a small bodied candle with higher shadow indicating exhaustion of upward momentum as index rallied 17 % over past fifteen weeks .

• We expect index to consolidate in coming week amid positive bias in the 44000 -45500 range . Sustaining above last week high of 45500 would indicate resumption of upward momentum towards 46300 in July as it s 138 . 2 % external retracement of Dec -Mar decline (44151 -38613 ) . Buy the dips

• PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround

• From structural perspective, Bank Nifty has retraced its December – March decline in faster time . Hence any temporary breather from hereon would provide fresh investment opportunity to ride the uptrend

• The formation of higher peak and trough on the larger degree chart makes us confident to revise support base at 44000 as it is 61 . 8 % retracement of most recent up move from lows of 43300 and confluence of rising 50 day ema

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