IGI Logo

Buying demand to emerge around key support of 18000-17800 levels

Technical Outlook

* The Nifty started the week with a positive gap and achieved our target of 18600. However, profit booking emerged from all-time high levels that dragged index toward psychological mark of 18000. The weekly price action formed a dark cloud cover candle that pared most of last week’s gains, indicating breather after 1150 points rally seen over past 10 sessions. The Nifty midcap and small cap indices underwent profit booking after witnessing 25% rally in past two months that hauled weekly stochastic in overbought territory

* Going ahead, we expect buying demand to emerge from 18000- 17800 range as we do not expect key support threshold of 17800 to be breached. Key point to highlight during ongoing corrective phase is that, the index has been retracing recent sharp up move as it filled the three positive gaps seen during last week. We believe such price action would make market healthier. The ongoing sectoral churn, pricing in the Q2FY22 earnings which is a healthy sign for structural up trend, wherein Banking, capital goods and realty continued to relatively outperform. Thus, any dip from here on towards 17800 should be capitalised on to accumulate quality stocks amid progression of Q2FY22 result season. Meanwhile, last week’s high of 18600 would act as immediate resistance

* Since May 2020, The Nifty midcap and small cap indices have not corrected for more than 9-10%. In current scenario both indices have already corrected 7% from their life time high, indicating limited downside. Thus we expect index to maintain the same rhythm by arresting ongoing correction in couple of percentage and undergo higher base formation in coming week

* Amongst sectors, BFSI, Capital goods, auto , realty to relatively outperform in the coming week

* In large caps we prefer SBI, Axis Bank, HDFC, L&T, Tata Motors, Tata Steel, DLF while in Midcaps we prefer Indian Bank, Federal Bank, KEC, Sundaram Finance, TCNS Brands, TCI, Gateway Distriparks, Prestige Estates, Mahindra CIE, Inox Leisure, Vmart

* Structurally, the formation of higher peak and trough on the larger degree chart signifies robust price structure 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 1783 In the coming session, the index is likely to open on a flat note tracking muted Asian cues. We expect index to maintain the rhythm of not correcting for more than 4 sessions in a row, since April 2021. Hence, use dip towards 18065-18095 for creating long position for target of 18185

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 40323

Technical Outlook

* • The weekly price action formed a bull candle with a higher high -low signaling continuation of the uptrend as it closed firmly above the psychological mark of 40000 levels .

* Going ahead, we expect the Bank Nifty to continue its outperformance over the Nifty and rally higher towards 41600 levels as it is the 123 . 6 % extension on the previous up move (34817 -38377 ) as projected from the recent major trough of 36876

* 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 has completely retraced its previous week 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 :

* The upper band of the last three weeks’ consolidation breakout area placed around 38300 levels

* 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 . We expect the index to continue with its positive bias as forming higher high -low in all time frame . After a positive opening use intraday dips towards 40360 -40420 for creating long position for the target of 40670 , maintain a stoploss of 40240

Nifty Bank Index – Daily Candlestick Chart

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer