IGI Logo

Nifty

• The Nifty witnessed a gap up opening 18385-18435. However, failed to capitalise the morning gains as index pared initial gains and gradually drifted downward. As a result, the daily price action formed a sizable bear candle that engulfed past three session trading range (18440-18200), indicating extended correction. As a result, index approached near 50 days EMA placed around 18200

• We expect, the index to prolong the ongoing corrective phase wherein strong support is placed at 17900. Key point to highlight is that, the Bank Nifty (which carries 37% weightage in Nifty) has closed below 20 days EMA and formed a lower high-low after 11 weeks rally, indicating extended correction. The past three week’s secondary correction (4%) in Nifty has hauled overbought conditions as weekly stochastic cooled off to 30 levels, indicating healthy retracement of past nine weeks 13% rally. Thus, extended dip from here on should be used to accumulate quality stocks. In the process, current week’s high of 18500 would act as key resistance in coming sessions

• Since June 2022 lows, time-wise index has not corrected for more than three consecutive weeks. 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

• The ratio chart of Nifty 500/Nifty 100 has turned up from lower band of one year’s range, indicating outperformance of midcap/small caps. We expect, both indices to relatively outperform and head gradually towards their respective highs

• In the coming session, index is likely open on a positive note tracking recovery in global markets. We believe, Wednesday’s high of 18500 would act as immediate resistance. Hence, any pullback from here on towards 18387-18420 should be used to create intraday short positions for target of 18303

Nifty Bank

• The daily price action formed a bearish engulfing candle as it engulfed last three sessions price action and closed firmly below the 20 days EMA (currently at 43138 ) for the first time since mid October 2022 indicating breach of upward momentum and extended profit booking after 18 % strong up move in the preceding 10 weeks .

• Going ahead, we expect the index to continue with its healthy consolidation in the broad range of 41800 -43600 , which will help to cool off the overbought conditions in the weekly stochastic (currently placed at 65 ) and form a higher base above the major support area of 41800 .

• 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 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

In the coming session index is likely to open on a flat to positive note tracking positive global cues . In today’s session, we expect the index to trade with higher volatility on account of weekly expiry and face stiff resistance around 43000 levels . Hence, use intraday pullback towards 42990 - 43070 for creating short position for a target of 42740 , with a stop loss of 43190 .

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer