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NSE (Nifty): 17999

Technical Outlook

* The daily price action formed a bear candle carrying lower highlow, indicating profit booking as index retreated from upper band of consolidation at 18200. In the process, Nifty small cap index relatively outperformed by gaining 0.4%

* Going ahead, we expect the index to prolong the ongoing consolidation in the broader range of 18200-17700 amid stock specific action as sectoral churn continues. Over past 11 sessions index has retraced 61.8% of 9 sessions decline (18604-17613) seen during October. The lack of faster retracement on either side indicates extended consolidation which would offer incremental buying opportunity as index approaches price/time wise maturity of correction. Price-wise Nifty has maintained the rhythm of not correcting for more than 7-9% while sustaining above 50 days EMA and time-wise intermediate corrections have got arrested within four weeks, observed during past 18 months. As index has already corrected 5.5% over past three weeks, we expect index to hold 17500 and eventually challenge upper band of consolidation at 18200. Hence, dips should be capitalised on to accumulate quality stocks

* The broader market indices are forming a higher base after retracing 61.8% of October decline. The sustenance above 50 days EMA that has been held since June 2020, highlighting robust price structure. We expect Nifty midcap and small cap indices to extend their consolidation and witness stock specific action

* Structurally, the formation of higher peak and trough on the monthly chart signifies robust price structure that makes us believe that ongoing breather would find its feet around 17500- 17600 range as it is October 2021 low which is placed at 17452.

In the coming session, the index is likely to open on a subdued note tracking muted global cues. We expect, index to prolong the consolidation amid stock specific action. Hence, use dip towards 17890-17922 for creating long position for target of 18007.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 38307

Technical Outlook

* The daily price action formed a bear candle with lower high - low signaling continuation of the corrective bias . The index is currently placed around the 50 days EMA

* Key observation is that the index since April 2020 has not corrected for more than four weeks barring one instance while 50 days EMA has acted as strong support during each of the corrective phase . In the current scenario with three weeks of decline already behind us, we expect the index to maintain the rhythm and form a higher base around 50 days EMA (currently placed around 38405 )

* In the ongoing truncated week, we expect index to continue with its healthy consolidation in the broad range of 38000 - 40000 . A weakness below 38000 will signal an extended corrective decline

* We believe the current breather should not be seen as negative instead it should be capitalized to accumulate quality banking stocks for the next leg of up move . Buying on dips strategy has worked well on multiple occasions in the last 18 months

* The index is currently placed at the support area of 38200 - 38000 levels being the confluence of :

* 61 . 8 % retracement of the recent up move (36876 -41829 ) placed at 38620 levels

* the upper band of the recent seven months range breakout area

* the rising 50 days EMA is also placed at 38390 levels

* In the coming session, index is likely to open on a negative note amid weak Asian cues . We expect, the index to continue with its consolidation around the crucial support area of 50 days EMA . Hence use intraday dips towards 38100 -38170 for creating long position for the target of 38440 , maintain a stoploss of 37980

Nifty Bank Index – Daily Candlestick Chart

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