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Nifty: 18691

• The Nifty witnessed a lackluster session where in it oscillated in 80 points range. Consequently, daily price action formed a doji like candle confined within Friday’s trading range, indicating supportive efforts emerged around 20 days EMA which ash been held since March. In the process, stock specific action prevailed.

• We believe, ongoing consolidation 18900-18400 would make market heathy by cooling off the overbought condition after 12% rally seen over past thirteen weeks. Therefore, a decisive close above 18900 would lead to acceleration of upward momentum towards 19300 in the month of July. Thus, buy on dips would be the prudent strategy to adopt as the strong support for the Nifty is placed at 18400 levels.

• Amidst ongoing consolidation, we expect Small caps to continue with its relative outperformance as Nifty Smallcap250 index has given a breakout from 20-month consolidation. Pattern implication suggest another 20-25% rally over next 12–15 month period. Thus, any profit booking from higher levels should not be construed as negative instead it should be used to accumulate quality stocks

• Structurally, the index has maintained the higher high-low formation on the monthly chart despite rise in volatility, indicating elevated buying demand that makes us confident to retain support base at 18400 as it is confluence of:

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 18486

• b) 61.8% retracement of current up move (18060-18886), at 18376

• c) 50 days EMA is placed at 18360

• d) current month’s low of 18464

Nifty Bank: 43641

Technical Outlook.

• The Daily price action formed a small Doji with higher high -low but in a narrow range indicating lacklustre trade and extended consolidation

• Index needs to witness follow through strength above higher band of channel at 44200 to indicate conclusion of corrective phase else extended consolidation in th e 43300 -44200 to continue

• Bank Nifty has been forming a lower high -low on weekly charts for past three weeks indicating healthy consolidation after sharp 15 % rally from March lows (38613 )

• From structural perspective, such corrective phase would make medium term trend healthier and would provide fresh investment opportunity with favourable risk -reward

• The index has immediate support at 43400 levels being the confluence of the last two weeks identical lows and the rising 50 -day ema

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