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Nifty (17606)

Technical Outlook

• After an initial blip, the index staged a strong comeback post RBI’s Monetary Policy outcome and approached our intermediate target of 17600. As a result, daily price action formed a bull candle with shadows on either side, highlighting elevated volatility. The formation of higher high-low signifies continuance of positive bias

• The lack of faster retracement on either side makes us believe index would continue to trade in a contracting pattern amid stock specific action. Key point to highlight since October 2021 is that, each of the corrective move has not retraced more than 80% of its prevailing move. In the current scenario as well, index has retraced 80% of recent decline (17794-17044). Therefore, any dip from hereon should not be construed as negative instead capitalised it to accumulate quality stocks as we do not expect index to breach current week’s low of 17044 and eventually form a higher bottom in coming sessions.

• The broader market indices are forming a higher base above 100 days EMA. We believe extended breather would make broader markets heathy and pave the way for the next leg of the up move

• Structurally, despite recent elevated volatility the Nifty managed to hold the key support threshold of 16800 and now forming a higher trough, highlighting buying demand at elevated support base. We do not expect it to breach 16800 as it is confluence of :

• a) 80% retracement of December-January rally (16410-18350), placed at 16798

• b) Panic low recorded in January 2022 is placed at 16836

In the coming session, index is likely to witness gap down opening tracking weak global cues. As index has retraced 80% of its previous up move, couple of days breather can not be ruled out. Hence after a negative opening use intraday pullback towards 17495-17525 for creating short position for target of 17407

Nifty Bank: 39011

Technical Outlook

• The daily price action formed a bull candle which maintained a higher high -low and closed around the 39000 levels . The index in the process retraced almost 90 % of its previous four sessions decline (39424 -37319 ) in just two session highlighting positive bias

• The index in todays session is likely to open gap down amid weak global cues . Going ahead, we expect the index to hold above the support area of 37500 -38000 and gradually head higher towards 40300 levels in coming weeks being the confluence of the 80 % retracement of the November -December 2021 decline (41829 -34019 ) and the 161 . 8 % external retracement of the recent breather (38855 -36375 )

• The index has immediate support at the 37500 -38000 levels being the confluence of the 50 days EMA (currently at 37667 ) and the 61 . 8 % retracement of the previous up move (36375 -39424 )

• Among the oscillators, the daily stochastic is seen rebounding from the neutral reading of 40 and has generated a buy signal moving above its three periods average thus validates positive bias

• 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 amid profit booking after last two sessions strong up move . Hence after a negative opening use intraday pullback towards 38820 -38880 for creating short position for the target of 38550 , maintain a stop loss at 39020

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