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NSE (Nifty): 15812

Technical Outlook

* The Nifty witnessed ~400 points intraday move as after initial decline (more than 190 points) index entirely recouped losses and settled at record highest close. The daily price action formed a bull candle with long lower shadow, highlighting elevated buying demand amid rise in volatility

* Going ahead, we expect index to endure its positive momentum and gradually head towards our earmarked target of 16100 in June 2021. On expected lines, bouts of volatility owing to overbought condition of weekly stochastic oscillator (currently placed at 97) have offered an incremental buying opportunity as in past 2 out of five sessions intermediate dips have been bought into, highlighting elevated buying demand. As a result, our buy on dips strategy worked well. Therefore, temporary breather should be utilised to accumulate quality large cap and midcaps as we expect index to form a higher base at key support around 15500 levels and eventually head towards 16100 being confluence of :

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

* b) Past two months consolidation (15140-14150) breakout target at 16120

* The formation of higher high supported by improving market breadth highlights robust price structure. Currently 90% components of Nifty 500 index are trading above their 50 days EMA compared to May reading of 86%, indicating broader market participation that augurs well for durability of ongoing up trend

* The Nifty midcap and small cap indices took a breather in the vicinity of all time high. Over past four weeks, Nifty midcap and small cap indices have rallied ~12% that pulled weekly stochastic oscillator in overbought territory (placed around 95), indicating couple of days breather at higher levels can not be ruled out

* Structurally, the formation of higher high-low highlights elevated buying demand that makes us confident to retain support base at 15400 as it is confluence of: a) As per change of polarity concept, earlier resistance of 15400 would now act as a key support b) 61.8% retracement of past three week’s rally (15145-15835), at 15409

* In the coming session, index is likely to open on a flat note amid mixed global cues. We expect Nifty futures to trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip towards 15770-15795 to create long for target of 15885.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 34950

Technical Outlook

* The daily price action formed a bullish hammer like candle signalling strong buying demand from the rising demand line joining lows of April 2021 (30405 ) and May 2021 (32115 ) . A follow through strength and a close above Monday’s high (34995 ) will signal resumption of up move after recent breather .

* Goining ahead, we believe the current breather should be used as an buying opportunity for up move towards our target of 36200 in June 2021 as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708-30405) and the price parity with previous up move (30405-34287) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* In a smaller time frame the index has witnessed a shallow retracement as it has already taken nine sessions to retrace just 50 % of its preceding eight sessions up move (33274 -35714 ) . A shallow retracement highlights a robust price structure and a higher base formation

* We do not foresee the index breaching the crucial support area of 34400 -34000 as it is confluence of the following technical observations :

* (a) 38 . 2 % retracement of the current up move (32115 -35810 ) placed at 34400

* (b) the recent breakout area and the April high (34287 )

* (c) The rising 50 days EMA placed at 34080 levels

* In the coming session, the index is likely to open on a flat note amid muted global cues . We expect the index to consolidate with positive bias . Volatility is likely to remain high . Use dips towards 34840 -34910 for creating long position for the target of 35140 , maintain a stoploss of 34740

* Among the oscillators the daily Stochastic has generated a buy signal from the oversold territory thus supports the positive bias

Nifty Bank Index – Daily Candlestick Chart

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