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NSE (Nifty): 14697

Technical Outlook

* The daily price action formed a bear candle carrying lower highlow, indicating extended breather after past five sessions up move (14461-14966)

* The lack of faster retracement on either side signifies extended consolidation (14900-14400) that would help index to form a higher base. Contrary to our expectation, breakout above the upper band of consolidation (15000) has been delayed. Hence, any decline from hereon should be capitalised as incremental buying opportunity in quality large cap and midcap stocks. In the process, we expect broader markets to relatively outperform amid progression of Q4FY21 earnings

* The broader market indices have taken a breather post clocking fresh 52-weeks, indicating breather after past three weeks sharp up move. We expect, Nifty midcap and small cap indices to relative outperform the benchmark by forming a higher base above their two months consolidation breakout area. Eventually, we expect broader markets to see acceleration in relative outperformance wherein small cap index would witness catch up activity as the midcap index is at an all-time high whereas small cap index is still 7% away from lifetime highs

* Structurally, we do not expect the index to breach the key support threshold of 14200. Despite elevated volatility owing to concern over second Covid-19 wave, it has managed to hold the key support of 14200 and formed a higher base. Hence 14200 would continue to act as a key support as it is confluence of:

*  a) 100 days EMA placed at 14298

* b) last month’s low placed at 14151

* The Nifty has not corrected for more than 2 consecutive sessions since mid-March 2021. In the current scenario as Nifty has already corrected over past 2 sessions, we expect supportive efforts to emerge near Wednesday’s low (Spot-14650). Hence, in the coming session, we expect index to consolidate with a positive bias amid stock specific action. Hence use intraday dip towards 14645-14670 to create long for target of 14759.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 32452

Technical Outlook

* The daily price action formed a bear candle with a lower high - low signalling corrective bias . The index in the last two sessions decline has retraced 61 . 8 % of its previous six sessions pullback (31906 -33297 )

* Going ahead, we expect the index to hold above the immediate support area of 31500 -32000 and witness a pullback towards 34900 levels in coming weeks as it is the 61 . 8 % retracement of the entire last two months decline (37708 -30405 )

* Key point to highlight is that over the past 10 sessions the index has retraced just 61 . 8 % of preceding seven sessions up move (30405 -34287 ) . The slower pace of retracement indicates a higher base formation

* The slower pace of retracement after the recent up move of 3880 points, which is the larger in magnitude compared to late February rally of 2256 points highlights robust price structure and the current consolidation should be used as an incremental buying opportunity in quality banking stocks

* The index has immediate support at 32000 -31500 levels being the confluence of the last two weeks low and the 61 . 8 % retracement of the current up move (30405 -34287 ) . While the major support is placed in the range of 30500 -30000 levels

* major support is placed in the range of 30500 -30000 levels • The index has maintained the rhythm of not correcting more than 20 % as witnessed since March 2020 . In the current scenario, it rebounded after correcting 19 % from the all -time high (37708 ) . Hence it provides favourable risk -reward setup for the next leg of up move

* In the coming session, the index is likely to open flat to negative note . Volatility is likely to be high on account of the volatile global cues . We expect the index to hold above 32200 levels and witness a pullback . Hence, use dips towards 32250 -32320 for creating long position for the target of 32550 , maintain a stoploss of 32140

Nifty Bank Index – Daily Candlestick Chart

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