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Technical Outlook

*The weekly price action formed a bear candle with lower highlow, indicating extended correction of post Budget rally (13662- 15432). Meanwhile, a significant lower shadow signifies supportive efforts emerged in the vicinity of 14400 levels

*In the coming week, we expect volatility to remain high, wherein the index would consolidate with a positive bias in the broad range of 14400-15000 amid stock specific action. Therefore, any dip from here on should not be construed as negative. Instead it should be capitalised on as an incremental buying opportunity to ride the prevailing major uptrend. A decisive close above psychological level of 15000 would confirm conclusion of ongoing corrective phase with an extended target of 15300

*On the sectoral front, we expect IT, pharma, FMCG to relatively outperform as they are better placed on relative rankings and risk reward parameters

*On the stock front, in large cap space we remain constructive on RIL, HUL, Divis Labs, TCS, Kotak Bank while in midcaps we are positive on Persistent, L&T Info, Timken, Zydus Wellness, Sequent and Supreme Industries

*The broader market indices snapped their six week’s rally and underwent healthy retracement after recent outperformance. Price wise, the Nifty midcap and small cap indices have not corrected for more than 9-10%, since March 2020. Meanwhile, since June 2020, on multiple occasions elevated buying demand emerged from 50 days EMA coinciding with rising trend line. In the current scenario as well, both indices bounced after correcting 8%, each and respected 50 days EMA, indicating inherent strength. Hence, we believe broader market would regain momentum and relatively outperform the benchmark

*Structurally, we believe the Nifty has strong support in vicinity of 14400 as it is confluence of: a) 61.8% retracement of post budget rally (13662-15432), at 14338 b) Friday’s panic low is placed at 14350, c) positive gap seen on February 2 (14469-14281) In the coming session, Nifty future is likely to open on a flat note tracking muted global cues. We expect the index to trade in a range after Friday’s sharp up move. Hence, use intraday dip towards 14680- 14705 to create long position for target of 14793.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 34161

Technical Outlook

*The weekly price action formed a bear candle with lower high - low, indicating extended correction after a strong post budget rally (30906 -37708 ) . Meanwhile, a long lower shadow signifies supportive efforts emerged in the vicinity of immediate support of 33300

*Going ahead, in the coming week we expect volatility to remain high, whereas the index would consolidate with a positive bias in the broad range of 33300 -35100 amid stock specific action . Only a formation of higher high -low in the daily chart on a sustained basis and a firm closing above 35100 would confirm conclusion of ongoing corrective phase with an extended target of 36500.

*The immediate support for the index is currently placed at 33300 levels being the confluence of the following technical observations :

a) The 61 . 8 % retracement of the budget rally (30906 -37708 ) is placed at 33400 levels

b) The Friday’s panic low is placed at 33361

c) The lower band of the rising gap area of 2nd February 2021 is also placed around 33300 levels

*The overall structure in the index remain positive as it has already taken 23 sessions to retrace just 61 . 8 % of preceding 11 sessions sharp up move (30906 -37708), at 33500 . The slower pace of retracement signifies healthy retracement and a higher base formation

*In the coming session, the index is likely to open on a flat note on back of muted global cues . We expect the index to trade in a range with positive bias after r Friday sharp pullback . Hence use dips towards 33870 -33930 for creating intraday long position for the target of 34140 , maintain a stoploss at 33770

*The last five weeks breather has helped the index to work off the overbought condition in the weekly stochastic and is currently placed at the neutral reading of 40 signalling continuation of the current consolidation in the coming week

Nifty Bank Index – Daily Candlestick Chart

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