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NSE (Nifty): 15691

Technical Outlook

* The Nifty started the weekly expiry session with a negative gap (15768-15648) and witnessed a 490 point move during the session. As a result, daily price action formed a high wave candle carrying lower high-low, indicating extended breather amid elevated volatility

* We believe ongoing temporary breather would make market healthy by cooling off the overbought conditions formed due to past eight weeks 12% rally (currently weekly stochastic oscillator is placed at 91). Hence, prolonged breather from here on should not be construed as negative. Instead, it should be capitalised on to accumulate quality large cap and midcap stocks, as we expect the index to undergo time wise correction and form a higher base at key support of 15500 that would gradually pave the way to head towards our earmarked target of 16100 in June 2021 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

* In tandem with benchmark, broader market indices underwent extended profit booking in recently run up stocks. Over past four weeks, Nifty midcap, small cap indices have rallied ~12% pulling weekly stochastic oscillator in overbought territory (around 91), indicating couple of days breather cannot be ruled out

* Structurally, we believe the Nifty has strong support in range of 15400. We do not expect it to be breached. Hence, any dip toward 15400 should be capitalised on as incremental buying opportunity as it is confluence of: a) as per change of polarity concept, earlier resistance of 15400 would now act as key support b) 61.8% retracement of past three week’s rally (15145-15902), at 15435

* The index has maintained the rhythm of not correcting for more than 2-3 sessions since mid-March 2021. In current scenario, index has already corrected over past 2 sessions. Thereby we expect index to maintain the same rhythm by witnessing pullback in coming session. Hence, use intraday dip towards 15700-15725 to create long for target of 15813.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 34605

Technical Outlook

* The daily price action formed a small bear candle with a upper shadow and a lower high -low signalling continuation of the profit booking for the second consecutive session .

* The index is currently placed near the crucial support area of 34400 -34000 , which we expect to hold and witness a pullback in the coming sessions . it is confluence of the following technical observations 

* (a) 38 . 2 % retracement of the current up move (32115 -35810 ) placed at 34400

* (b) the recent breakout area and the April high (34287 ) 

* (c) Rising 50 days EMA placed at 34175 levels

* (d) the value of the rising demand line joining lows of April 2021 and May 2021 is placed around 34500

* We believe the current breather should not be seen as negative instead it should be used as an incremental buying opportunity in quality banking stocks for up move towards our target of 36200 in June 2021 as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708-30405) and the price parity with previous up move (30405-34287) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* In a smaller time frame the index has witnessed a shallow retracement as it has already taken 12 sessions to retrace just 50 % of its preceding eight sessions up move (33274 -35714 ) . A shallow retracement highlights a robust price structure and a higher base formation

* In the coming session, the index is likely to open on a positive note amid firm Asian cues . Volatility is likely to be high as we expect the index to hold above Monday’s low (34455 ) and consolidate in a range with positive bias . Hence, use dips towards 34560 -34620 for creating long position for the target of 34850 , maintain a stoploss of 34440

Nifty Bank Index – Daily Candlestick Chart

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