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Nifty

Technical Outlook

• The Nifty opened above the psychological mark of 18000 with a positive gap (17936-18044) and continued to march upward as intraday dips were short lived. As a result, daily price action formed a bull candle carrying higher high-low, indicating acceleration of upward momentum

• In today’s session, The index is likely to witness gap down opening tracking weak global cues. Key point to highlight is that past three weeks over 900 points rally hauled daily stochastic in overbought conditions (currently placed at 90). Thus, temporary breather from here on tracking volatile global cues should not be construed as negative, instead dips should be used as incremental buying opportunity to ride next leg of up move towards 18300 in coming weeks and eventually retest lifetime highs of 18600 in a couple of months. In the process, immediate support is placed at 17500

• The current up move is validated by improvement in broader structure as significant jump has been observed in Bullish Golden Crossover (50 days EMA crossing above 200 days EMA) in Nifty 500 universe as currently 53% of the stock have witnessed golden cross compared to early August 2022 reading of 38%. As long-term indicators carry more weight, the Golden Cross represents a major shift in momentum from bears to bulls indicating rejuvenation of upward momentum in the broader market post occurrence of Golden cross in Nifty. In relative terms, ratio chart of Nifty Midcap against the Nifty has surpassed November 2021 highs while Nifty Small cap ratio chart has given a breakout from falling channel and expected to catch up

• The Relative ratio of Nifty 500 index against S&P 500 has given a breakout from a decade long consolidation, indicating outperformance of Indian equities against S&P 500 as domestic markets are already the best performers within EM pack. Similar breakout in 2003 was followed by multiyear outperformance of Indian equities. From 2003 lows, Nifty 500 gained eight times, S&P 500 only doubled.

• Structurally, formation of higher high-low on the larger degree chart makes us confident to revise support base at 17500 as it is 61.8% retracement of preceding 2 week rally (17166-18088) coincided with 20 days EMA placed at 17238

• In the coming session, index is likely to witness gap down opening tracking weak global cues. However, post initial blip we expect index to stage a bounce. Hence, use intraday dip towards 17664-17688 for creating long position for the target of 17778.

Nifty Bank

Technical Outlook

• The daily price action formed a bull candle with a higher high -low and a small bullish gap below its base (40574 - 40694 ) signaling continuation of the up move

• In the coming session the index is likely to open gap down amid weak global cues . However we expect buying demand to emerged around the support area of 39500 -39000 in the coming couple of sessions and the index to head towards the all -time high of 41800 levels in the coming weeks being the measuring implication of the last three weeks range breakout (39800-37944). Thus, the current breather on account of the global volatility should not be seen as negative instead should be used as incremental buying opportunity

• Structurally the recent rally from June lows of 32290 is strongest in magnitude terms since October 2021 while declines are smaller and short lived indicating an improving price structure .

• Bank Nifty continue to relatively outperformed the benchmark index in the last few quarters as can be seen in the Bank Nifty/Nifty ratio chart . Within the banking stocks PSU banking stocks has been resilient and showing relative strength which we expect to continue with its outperformance going forward

• The index has support around 39000 levels as it is the confluence of the last week low and the 61 . 8 % retracement of the current up move (37944 -40904 ) In the coming session index is likely to open gap down amid weak global cues . However, after the initial decline we expect the index to hold above the last week low (39340 ) and witness a pullback . Hence use intraday decline towards 39550 -39630 for creating long position for the target of 39890 , maintain a stoploss at 39440

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