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Nifty

• The Nifty started the weekly expiry session on a positive note. However, failed to sustain at higher levels and gradually skidded below 18200 levels. The daily price action formed a bear candle carrying lower high-low, indicating extended correction that resulted index to settle below 50 days EMA. Key point to highlight is that, the Bank Nifty (which carries 37% weightage in Nifty) has continued to witness profit booking after forming a lower highlow post 11 weeks rally, indicating near term weakness

• The formation of a lower high-low signifies continuance of corrective bias. We expect, the index to prolong the ongoing corrective phase wherein strong support is placed at 17900. The past three week’s secondary correction (4%) helped index to cool off overbought conditions (weekly stochastic placed at 28 levels), indicating healthy retracement of past nine weeks 13% rally. Thus, extended dip from here on should be used as buying opportunity in quality stocks. In the process, current week’s high of 18500 would act as key resistance in coming sessions

• In tandem with the benchmark, the broader market indices have seen profit booking. Key point to highlight is that, the Nifty midcap, small cap indices are poised at lower band of rising channel. The breakdown below rising channel would lead to pause in upward momentum, leading to extended consolidation in coming weeks

• Time-wise, index has not corrected for more than three consecutive weeks, since June 2022 lows. With two week’s correction already in place, we expect the market to present a buying opportunity in the coming week. We expect ongoing corrective phase to find its feet around 17900 as it is confluence of: a) 50% retracement of October-December rally 16748-18887 is at 17820 b) 100 days EMA is at 17820 c) November 2022 low is at 18959

• In the coming session, index is likely open on a negative note tracking weak global cues. The breach of 50 days EMA signifies prolongation of corrective bias. Thus, any pullback from here on towards 18155-18185 should be used to create intraday short positions for target of 18067

Nifty Bank

• The daily price action formed a bear candle with a lower high -low signaling continuation of the corrective decline and an extended profit booking after 18 % strong up move in the preceding 10 weeks .

• Going ahead, we expect the index to continue with its last two weeks healthy consolidation in the broad range of 41800 -43600 , which will help to further cool off the overbought conditions developed in the weekly stochastic and form a higher base above the major support area of 41800 in the coming weeks

• The current breather should not be seen as negative instead should be capitalised on as an incremental buying opportunity as the overall structure remain firmly positive

• The Bank Nifty has support at 41800 -41600 mark being the confluence of the (a) 38 . 2 % retracement of the last 10 weeks up move (37387 -44151 ) placed at 41580 (b) the 10 weeks EMA currently placed at 42210 levels (c) the upper band of the recent major range breakout area is also placed around 41800 levels

• The weekly stochastic has cooled off from the recent overbought condition and is currently placed around the reading of 55 indicating healthy retracement of the sharp rally of the preceding 10 weeks

In the coming session index is likely to open on a negative note tracking weak global cues . Index in today’s session to continue with its corrective bias maintaining lower high -low . Hence, use intraday pullback towards 42400 -42480 for creating short position for a target of 42130 , with a stop loss of 42590 .

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