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Nifty: 17368

Technical Outlook

* Nifty scaled to three week high of 17639 before giving up 284 points from day’s high, resulting in a bear candle indicating extended breather and lack of sustainability above 50-day EMA (17516). Index has turned sideways over past three sessions by retracing just 38% of preceding 2 day up move indicating higher base formation ahead of key US Fed meeting

* Going ahead, we remain constructive on the market as we expect anxiety around Omicron variant to settle down and the Nifty to undergo healthy retracement after recent pullback and form a higher base formation around 16900-17000 that would set stage for an eventual resolve above higher band of consolidation at 17500. Hence any dip in ongoing week should not be construed negative rather an incremental buying opportunity to accumulate quality stocks. Our constructive thesis is based on following observation:

* a) price wise index has maintained the rhythm of not correcting for more than 11% since May 2020. Time wise, the index has arrested secondary correction within 9 weeks. In current scenario, with eight weeks correction along with 10% correction behind us we believe the index would eventually witness a breakout from past two weeks consolidation b) Current rally from last week’s low (16782-17543=761 points is now bigger than early November pullback (17613-18210=597 points) supported by across sector participation, indicating structural improvement

* Our projection of target of 18000 is confluence of: a) 61.8% retracement of entire decline since October high (18600-16782) is placed at 16900 b) Implicated target of past two weeks consolidation (17500-16900) is placed around 18000

* Broader market indices are expected to extend their relative outperformance as they have resolved out of strong base formation near 50-dema with improvement in market breadth as currently 54% of midcap index components are trading above 50 days EMA compared to last week’s reading of 35, highlighting rejuvenation of upward momentum

In the coming session, the index is likely to open on a negative note tracking subdued global cues. We expect, index to extend the ongoing breather amid stock specific action. Hence use pullback towards 17370- 17400 for creating short position for target of 17282

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 36925

Technical Outlook

* The daily price action bear candle signaling continuation of the consolidation for the third consecutive session above the last weeks breakout area of 16800 -16700 . Volatility is likely to remain high ahead of the FOMC meeting outcome on Thursday .

* Index in the previous week resolve above last two weeks range (35300 -36800 ) and also closed above the falling channel containing the entire corrective decline thus opening upside towards 38500 levels in the coming weeks being the confluence of the previous breakdown area and 50 % retracement of the entire decline (41829 -35328 )

* The index has seen a rebound during previous week after 6 weeks of corrective decline thus maintained the rhythm of rebounding after 6 - 8 weeks of corrective phase as seen since April 2020 signaling continuation of the overall positive structure

* Nifty Bank has immediate support at 35300 levels being the confluence of the following technical observations : • (a) 200 days EMA placed at 35360 levels

* (b) The 80% retracement of the August -October 2021 rally (34115 -41829 ) is also placed at 35300 levels

* Among the oscillators the daily 14 periods RSI is placed near its nine periods average signals continuation of the consolidation in the coming sessions

* In the coming session, index is likely to open on a negative note amid weak global cues . We expect the index to trade with corrective bias in intraday trade . Hence after a negative opening use intraday pullback towards 37030 -37090 for creating short position for the target of 36760 , maintain a stoploss at 37210

Nifty Bank Index – Daily Candlestick Chart

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