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NSE (Nifty): 16258

Technical Outlook

* The buying demand from the lower band of Wednesday’s gap area (16130-16176) helped index to settle on a positive note. The daily price action formed a high wave candle, highlighting elevated volatility amid stock specific action. In the process, Bank Nifty posed a strong show and gained 0.6%

* Going ahead, we expect index to gradually resolve above 16300 mark and accelerate upward momentum towards our revised target of 16600 in coming month. Key point to highlight is that, the Bank Nifty is undergoing a shallow price retracement after last week’s sharp up move, highlighting robust price structure. We believe, a revived traction in banking stocks (which carries 37% weightage in Nifty) would drive Nifty towards 16600 as it is 138.2% extension of mid June rally (15450-15915) projected from June high of 15915 is placed at 16575

* We expect, Indian benchmarks to accelerate outperformance against Developed and Emerging market peers as signalled by fresh breakout on relative ratio chart. Thus temporary breather from here on should be capitalised on to accumulate quality stocks amid progression of Q1FY22 result season

* The broader market indices extended breather as Nifty midcap and small cap indices dropped 0.7% and 0.9%, respectively. We believe, extended breather from here on would help broader market indices to cool off the overbought conditions make market healthy

* Structurally, The formation of higher peak and trough on the larger degree chart makes us confident to retain support base at 15900, as it is confluence of:

* a) 50% retracement of July-August rally (15513-16349), at 15930

* b) as per change of polarity concept earlier resistance of 15900 would now act as key support

In the coming session, the index is likely to open on a flat note tracking muted global cues. We expect index to stage a pullback from Wednesday’s gap area (16130-16176). Hence use intraday dips towards 16205-16230 to create long for target of 16319

NSE Nifty Daily Candlestick Chart

Nifty Bank: 36029

Technical Outlook

* The daily price action formed a small bull candle with a higher high signalling continuation of the up move . The index closed firmly above the recent eight weeks’ consolidation breakout area (35800 -34000 ) highlighting strength .

* Going ahead, we expect the index to maintain its current up trend and gradually head towards the 36600 levels in the coming weeks being the confluence of the previous major high of March 2021 and the 138 . 2 % external retracement of the current breather (35810 -33908 )

* Index has witnessed a strong rebound and generated a faster retracement of its last falling segment as preceding 10 sessions decline (35977 -34115 ) was completely retraced in just three sessions . A faster retracement of the last falling segment in less than half the time interval signals robust price structure

* Structurally , the formation of higher peak and trough on the larger degree chart makes us confident to revise support base upward at 34500 as it is confluence of :

* (a) 80 % retracement of the current up move (34115 -36219 ) placed around 34500

* (b) rising 100 days EMA placed around 34238 levels

* (c) The last week low is also placed at 34588 levels 

* Among the oscillators, the daily stochastic remain in up trend thus thus validates positive bias

* In the coming session, index is likely to open on a flat note amid muted global cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence, use intraday dips towards 35880 -35940 , for creating long position for target of 36180 , maintain a stoploss of 35770

Nifty Bank Index – Daily Candlestick Chart

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