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NSE (Nifty): 15752

Technical Outlook

* The pullback after a gap down opening (15923-15755) remained short lived. As a result, the index extended profit booking over a second consecutive session. The daily price action formed a bear candle with shadows on either side, indicating extended breather amid elevated volatility. In the process, broader market indices relatively outperformed

* The lack of follow through strength above upper band of consolidation (15900) on fifth occasion in last one month highlights key resistance at 15900 levels. Over past two sessions index has retraced 80% of preceding 4 sessions up move (15632- 15962). Therefore, key thing to monitor is that, holding above past three week’s low around 15600 would lead to prolonged consolidation (15900-15500) with stock specific action. Meanwhile, a decisive close above 15900 would be required to open the door for next leg of up move toward our earmarked target of 16100. Thus, dips should be capitalised on to accumulate quality stocks amid progression of Q1FY22 earning season. Our target of 16100 is based on :

* a) price parity of post Budget rally (13597-15432), projected from April low of 14151, at 16055

* b) past two month’s range (15140-14150) breakout target at 16120

* The Nifty midcap and small cap indices endured their relative outperformance against benchmark as Nifty midcap lost 0.7% while small cap remained unchanged. Formation of higher peak and trough on the larger degree supported by sturdy market breadth signifies inherent strength that augurs well for durability of ongoing relative outperformance

* Structurally, we believe the Nifty has formed a strong higher base above 15600-15500 which has been held despite global volatility. We do not expect to breach 15500 as it is confluence of:

* a) 80% retracement of June-July rally (15450-15962), at 15550

* b) 10 weeks EMA placed at 15595 In the coming session, index is likely to open lower tracking subdued global cues. However, post negative opening we expect supportive efforts to emerge around 15650. Hence, use intraday dip towards 15660-15685 to create long for target of 15783

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35079

Technical Outlook

* The daily price action formed a Doji candle with a bearish gap above its head signalling profit booking from the upper band of the last six weeks range . The index since April has not corrected for more than four consecutive sessions, with two sessions of decline already behind us, we expect the index to rebound in the coming couple of sessions .

* Going ahead, in the ongoing truncated week we expect the index to continue with its last six weeks consolidation in the broad range of 34500 -35800 . Only a decisive breakout above the same will open upside towards 36200 levels in the coming weeks as it is the 80 % retracement of the February – April 2021 decline (37708 -30405 ) .

* The index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 -35810 ) over past six weeks highlighting a positive price structure and a higher base formation

* We advise to capitalize the current breather as an incremental buying opportunity in quality large and mid cap banks as the overall structure remains positive

* The index has support base 34500 -34800 levels being the confluence of the following technical observations :

* (a) The 61 . 8 % retracement of the previous up move (33908 - 35985 ) placed at 34720 

* (b) The rising 50 days EMA is also placed at 33800 levels

* In the coming session, index is likely to witness flat to negative opening tracking weak global cues . However, we expect index to attempt a pullback from psychological mark of 35000 . Hence use intraday dips towards 34990 -35060 , for creating long position for target of 35280 , maintain a stoploss of 34870

Nifty Bank Index – Daily Candlestick Chart

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