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Nifty: 18314

Technical Outlook

• The index started the week on a positive note and gradually inched northward as intraday dips were bought into. As a result, daily price action formed a bull candle carrying higher high-low, indicating continuance of positive bias as index witnessed follow through strength to Friday’s hammer like candle.

• Going ahead, we expect Nifty to resolve higher and head towards upper band of consolidation placed at 18500 in coming weeks wherein small caps to relatively outperform the benchmark. In the process, bouts of volatility owing to monthly expiry week coupled with global volatility can not be ruled out. Thus, buy on dips would continue to be the prudent strategy to adopt. Structurally, our positive stance is further validated by following observations:

• a) emergence of buying demand from lower band of consolidation (18000) coincided with 20 days EMA, signifies robust price structure

• b) the Bank Nifty is hovering in the vicinity of ALL Time High. The resilience in Bank Nifty (which carries 38% weightage in Nifty) displays inherent strength

• c) we expect Nifty small cap space to witness catch up activity as many small cap stocks which are not part of small cap index are coming out of large consolidations. Highlighting point is that, the Nifty midcap index is just 2% away from its All Time High whereas Nifty small cap index is still 17% away. Thus, quality small cap stocks should be in focus

• d) FII’s inflows have remained sturdy in May which is a key supporting factor for acceleration of structural uptrend ahead

• The broader market indices continued with their relative outperformance while maintaining higher peak and trough, indicating elevated buying demand. Thus, broader market should be in focus as we approach the fag end of the earning season

• Structurally, formation of higher high-low on the monthly chart signifies elevated buying demand that makes us confident to keep support base at 17800 as it is 38.2% retracement of Mar-May up move (16828-18458) coincided with 50 days EMA placed at 17890

• In the coming session, index is likely to open on a flat to positive note tracking mixed global cues. We expect index to trade with a positive bias while maintaining higher high-low formation. Hence, use intraday dip in May future towards 18290-18322 to create intraday long positions for target of 18407 with a stoploss of 18253.

Nifty Bank: 43885

Technical Outlook

• The daily price action formed a high wave candle which remained contained inside previous session high -low range signalling consolidation after recent strong up move of 15 % points in the last eight weeks

• Going ahead, index is likely to consolidate and form a base in the coming sessions amid higher volatility on account of the monthly expiry . Only a firm closing above the all -time high (44151 ) will open further upside towards 44900 levels in coming weeks . However, the up move towards 44900 would be in a non -linear manner as bouts of volatility after last two months strong up move cannot be ruled out, hence dips should be used as a buying opportunity

• Key observation in the weekly chart of Bank Nifty is that it has witnessed a faster retracement of the 14week decline (44151 -38613 ) during Dec22 -Mar23 in just seven weeks . Faster retracement in just half the time interval indicating structural improvement from medium term perspective

• On relative terms, Bank Nifty continues to outperform the Nifty . The Bank Nifty/Nifty ratio line continues to trend higher and maintain higher high -low signalling extended period of outperformance .

• The index has key support at 42700 levels being the confluence of the recent low and the 38 . 2 % retracement of the recent up move (39610 -44151 )

• Weekly Stochastic is seen reacting lower from the oversold territory, consolidation in the coming weeks will help the index to cool off the overbought condition

• In the coming session, the index is likely to open on a flat note amid mixed global cues . Index to extend its consolidation with positive bias . Hence, use intraday dips towards 43720 -43800 for creating long position for the target of 44040 , maintain stoploss at 43610

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