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Index to consolidate amid stock specific action...

Technical Outlook

* The Nifty underwent profit booking after clocking a fresh all-time high of 15901. The weekly price action formed a high wave candle, indicating a breather amid elevated volatility. The major profit booking was seen in midcap and small caps

* In the coming expiry week, we expect index to consolidate in the broader range of 15900-15400 amid stock specific action. The ongoing healthy consolidation would help index to cool off the overbought conditions and form a higher base. The broader structure remain bullish thereby we reiterate our positive stance of Nifty heading towards earmarked target of 16100. However, bouts of volatility from here on cannot be ruled out which would offers incremental buying opportunity in the range of 15300-15500. 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

* On the sectoral front, we expect IT, FMCG to relatively outperform while BFSI, auto and capital goods offer favourable risk-reward

* Our preferred large caps are Infosys, Reliance Industries, Hindustan Unilever, Ambuja Cement, Bajaj Finance, HDFC Life, Tata Motors while, in midcaps we like Mindtree, Nocil, CSB Bank, Caplin Point, Indo Count Industries, Rallies India, NRB Bearing

* In tandem with benchmarks, broader market indices underwent profit booking amid overbought conditions. Over past four weeks, Nifty midcap, small cap indices have rallied ~12% pulling weekly stochastic oscillator in overbought territory, indicating extended breather from here on cannot be ruled out

* Structurally, we believe extended breather from here on would get anchored around 15200. The Nifty has formed a strong higher base at 15200 which we do not expect to be breached. Hence, traders should take advantage of dips to accumulate quality stocks. The key support of 15200 is based on 61.8% retracement of past four week’s rally (14885-15901), at 15274

* In the coming session, index is likely to witness gap down opening tracking subdued global cues. However, post initial blip we expect index to attempt a pullback from 15500 levels being 80% retracement of Friday’s recovery (15450-15729). Hence, use intraday dip towards 15490-15517 to create long for target of 15604.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 34558

Technical Outlook

* The weekly price action formed a small bear candle with long shadows on either side, indicating breather amid elevated volatility after recent sharp up move of more than 11 % in the preceding three weeks

* In the upcoming monthly expiry week, we expect the index to consolidate in the broad range of 35500 -34000 with stock specific action

* The broader positive structure remain intact and we believe the current breather should be used as an incremental buying opportunity in quality banking stocks for up move towards our target of 36200 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 13 sessions to retrace just 50 % of its preceding 12 sessions up move (32115 -35714 ) . A shallow retracement highlights a robust price structure and a higher base formation

* The index on last Friday’s session rebounded from the crucial support area of 34000 , which we expect to hold on a closing basis, as it is confluence of following technical observations :

* (a)The 50 % retracement of the previous up move (32115 -35714 ) placed at 33900

* (b) The value of the rising demand line joining lows of April 2021 and May 2021 is placed around 34300

* (c)The recent breakout area and the April high (34287 ) .

* (d)The rising 50 days EMA placed at 34150 levels

* In the coming session, the index is likely to open gap down amid weak global cues . Volatility is likely to be high as we expect the index to hold above Friday’s low (33937 ) and consolidate in a range . Hence, use dips towards 34060 -34120 for creating long position for the target of 34360 , maintain a stoploss of 33940

Nifty Bank Index – Daily Candlestick Chart

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