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Nifty: 17629

Technical Outlook

In line with our view, buy on dips strategy has once again worked well as elevated buying demand emerged from lower band of rising channel (as shown in adjoining chart) coincided with 10 days EMA which has been held since July 2021, highlighting inherent strength. As a result, daily price action formed a bull candle with significant lower shadow, indicating buying demand at elevated support base as Nifty recovered more than 250 points from days low of 17326 Going ahead, we expect index to form a higher base formation above key support threshold of 17200 and gradually retest the upper band of consolidation placed at 17800. Meanwhile, consolidation with positive bias amid stock specific action would continue, which would make market healthy after past seven-week 15% rally that would in turn help weekly stochastic oscillator to cool off overbought conditions. The Nifty has maintained rhythm of not correcting more than 3-4% from highs since April 2021, while time wise it has not corrected for more than 4 trading sessions in a row. In current scenario as well elevated buying demand emerged after correcting ~3% and not corrected for more than 3 sessions, indicating robust price structure that validates strong support at 17200 levels as it is 50% retracement of last leg of up move (16565-17792) placed at 17180 Broader market indices have extended breather after gaining around 15% each over a month. Such sharp gains have led weekly stochastic oscillator into overbought zone with reading in excess of 90 and likely to undergo healthy consolidation wherein stock specific action would continue

In the coming session, the index is likely to open on a subdued note tracking muted global cues. After Tuesday’s sharp recovery (more than 250 points), we expect Nifty to hold intraday support of 17450. Hence, after a subdued opening use intraday dip towards 17480-17510 for creating fresh long position for target of 17597

Nifty Bank: 37668

Technical Outlook

* The daily price action formed a bullish hammer like candle with a long lower shadow signaling strong support at lower levels around 36500 levels . A follow through strength above Tuesday’s high (37340 ) will signal continuation of the up move and will lead to retest of the recent all time high of 38100 in the coming sessions

* Going ahead, we expect the index to continue with its current healthy consolidation in the broad range of 36500 -38100 , thus form a higher base for the next leg of up move . On structural note, our broader positive stance for Bank Nifty remains intact with target of 38600 as it is the price parity with the previous two major up move of July (34115 -36317 ) and August (34817 - 37140 ) each measuring roughly 2250 points added to the previous week low of 36327 signals upside towards 38600 levels

* Volatility is likely to remain high on account of the volatile global cues . Buying on decline strategy has worked well in the last 15 months, thereby the current volatility would present incremental buying opportunity in quality banking stocks

* The index has support base around | 36500 -36200 levels as it is the confluence of the following technical observations :

* 50 % retracement of the current up move (34817 -38112 ) placed around 36500 levels

* The upper band of the last three months range breakout area is placed around 36300 levels

* rising 20 days EMA also placed around 36610 levels

* The last two weeks lows are also placed around 36200 levels

* In the coming session, index is likely to open on a flat note amid mixed global cues . We expect the index to continue its previous session pullback, hence use intraday dips towards 37170 -37230 for creating long position for target of 37470 , maintain a stoploss of 37040

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