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NSE (Nifty): 15885

Technical Outlook

* The Nifty witnessed a gap up opening (15763-15875) and subsequently traded in a narrow range. As a result, daily price action formed a small bull candle carrying higher high-low, indicating follow through strength to last week’s pullback. In the process, broader markets continued to clock a fresh all time high

* The index has retraced more than 80% of past seven sessions decline (15962-15513) in just three sessions, highlighting inherent strength. Thus, a decisive close above upper band of consolidation placed at 15950 would lead to faster retracement. The faster pace of retracement along with multi sector participation makes us believe that index would resolve above ongoing consolidation (15950-15500) which will dictate directional bias and lead index gradually to earmarked target of 16300 in coming weeks, else extended consolidation with positive bias amid stock specific action. Our earmarked target of 16300 is based on following observations: a) implied target of recent consolidation (15950- 15500) breakout is placed at 16350 b) 161.8% external retracement of mid-July decline (15962-15513), placed at 16240

* The Nifty midcap and small cap indices endure their record setting spree, highlighting relative outperformance. The rejuvenation of uptrend after recent breather augurs well for further acceleration of relative outperformance

* Structurally, the index is undergoing a shallow retracement as over past seven weeks it has merely retraced 23% of preceding 8 weeks rally (14150-15900), highlighting robust price structure. The persistent buying demand from key support zone of 15500 signifies strong base formation, which we do not expect to breach. Hence, dips from hereon should be capitalised on to accumulate quality stocks amid progression of Q1FY22 earning season. Key support of 15500 is confluence of a) 80% retracement of June-July rally (15450-15962), at 15550 b) 50 days EMA placed at 15620

* In the coming session, the index is likely to open on a flat note tracking muted Asian cues. We expect elevated buying demand to emerge from intraday support of 15800. Hence use intraday dips towards 15835-15855 to create long for target of 15945

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34710

Technical Outlook

* The daily price action formed a high wave candle with a higher high -low signalling consolidation with positive bias ahead of the RBI monetary policy on Friday

* Going ahead, we expect the index to hold above the lower band of the last eight weeks’ consolidation range (34000 ) and gradually head towards the upper band of the range placed around 35800 levels . Lack of faster retracement in either direction signals continuation of the current consolidation .

* Key observation is that the index since May 2021 has not corrected for more than two consecutive weeks, with two weeks of decline already behind us we expect the index to maintain the rhythm and witness a pullback in the coming week

* Index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 -35810 ) over past eight weeks signalling a positive price structure . We advise to capitalize the current breather as an incremental buying opportunity in quality large and mid -cap banks as the overall structure remains positive

* The index has immediate support base at 34000 levels being the confluence of the following technical observations

* (a) The lower band of the last seven weeks’ consolidation range placed around 34000 levels

* (b) The rising 100 days EMA is also placed at 34074 levels

* (c) The 50% retracement of the preceding up move (32115 - 35985 ) is also placed at 34100 levels

* In the coming session, index is likely to open on a flat to negative note amid soft Asian cues . We expect the index to maintain higher high -low and trade with positive bias . Hence use intraday dips towards 34630 -34690 , for creating long position for target of 34930 , maintain a stoploss of 34510

Nifty Bank Index – Daily Candlestick Chart

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