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NSE (Nifty): 14359

Technical Outlook

* The Nifty witnessed a gap down opening and approached the lower band of consolidation at 14200. However, buying demand emerged in the vicinity of key support threshold of 14200 which has been held thrice over past five weeks coincided with 100 days EMA at 14162 that helped the index to recover some of initial losses. Monday’s entire price action resembles a hammer like candle, indicating elevated buying demand

* Going ahead, we expect prolonging of consolidation (14800- 14200) amid stock specific action. Amid a host of negative news flow related to Covid-19 second wave, the index managed to hold lower band of consolidation at 14200. Therefore, we believe only the breach of Monday’s panic low around 14200 (on a closing basis) would lead to extended correction. Else there would be continuance of stock specific action amid ongoing Q4FY21 result season

* The broader market indices are undergoing healthy retracement after approaching their 52 weeks highs. Key point to highlight since March 2020 is that Nifty midcap and small cap indices have maintained the rhythm of not correcting for more than average 9- 10% while sustaining above their 50 days EMA, indicating robust price structure. Currently, Nifty midcap, mall cap indices have corrected 8% while hovering around their 50 days EMA, indicating temporary breather cannot be ruled out. However, such a breather should be capitalised on to accumulate quality stocks as we expect broader market to maintain the aforementioned rhythm of not correcting for more than 9-10%

* Structurally, key point to highlight over past four weeks is that, despite elevated volatility owing to impact of rising Covid 19 cases in India, Nifty has managed to hold lower band of consolidation 14200 on three occasions, highlighting key support zone as it is confluence ofa) 61.8% retracement of February rally (13596-15432), at 14297 b) Monday’s panic low is placed at 14191

* In the coming session, Index is likely to open on a flat note. Sustenance above Monday’s high (Spot14382) would open further pullback option, else consolidation amid stock specific action. Hence, use intraday dip towards 14250-14275 to create long for target of 14364.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 31208

Technical Outlook

* The daily price action formed a hammer like candle with a small real body and a long lower shadow highlighting buying demand near the previous week low (30520 ) amid oversold placement of the weekly stochastic .

* Going ahead, we expect volatility to remain high, as the index is likely to consolidate in the broad range of 30000 -32500 in the ongoing truncated week

* Key point to highlight is , since March 2020 bottom, the index has a maintained rhythm of not correcting for more than 21 % . In the current scenario, with 19 % correction done, index is poised at crucial support and provides favourable risk -reward setup

* The index has strong support in the range of 30500 -30000 levels being the confluence of the following technical observations :

a) Price equality with the average of the previous two major correction in the last one year signals strong support around 30000 levels

b)The rising long term 200 days EMA is also placed around 29815

* The last nine weeks corrective decline has lead to the weekly stochastic placed near the oversold territory with a reading of 20 indicating an impending pullback in the coming weeks .

* On the higher side 32500 is likely to act as immediate hurdle being the high of previous week and the upper band of the bearish gap area of 12th April 2020 .

* In the coming session, the index is expected to open flat to positive note . The index witnessed a strong rebound in the second half of Monday from the major support area (30500 ) . We expect the current pullback to continue . Hence use dips towards 30780 -30840 for creating long position for the target of 31080 , maintain a stoploss of 30670

Nifty Bank Index – Weekly Candlestick Chart

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