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Technical Outlook

* The daily price action formed a piercing line candle, highlighting inherent strength as after a gap down opening buying demand emerged from 100 days EMA (placed at 14170), which helped index to recoup intraday losses entirely. The follow through strength above piercing line candle (on a closing basis) will signify trend reversal that would confirm the bottom is in place

* The index has managed to hold the lower band of consolidation (14200) despite elevated volatility owing to surging Covid-19 wave 2 across India, highlighting inherent strength. Going ahead, we expect the index to consolidate in the 14600-14200 range with stock specific action amid progression of Q4FY21 result season. A decisive close above 50 days EMA (14600), which has been acting as immediate hurdle, would open the door for extended pullback towards 14800 else there would be prolonging of consolidation. Hence, accumulating quality large caps on dip would be the prudent strategy to adopt at current juncture

* The broader market has been forming a higher base above 50 days EMA, which has been held since June 2020. Key point to highlight is that, the Nifty midcap and small cap indices have maintained the rhythm of not correcting for more than average 10%, since March 2020, indicating robust price structure. Currently, both indices have corrected 8% from their 52 weeks high and approached the vicinity of their 50 days EMA, indicating possibility of couple of percentage correction from here on cannot be ruled out. However, such dip should be used as incremental buying opportunity

* Structurally, only the breach of lower band of consolidation 14200 would lead to extended correction towards key support of 13900-13800 range, as it is confluence of: a) 80% retracement of the February rally (13596-15432), at 13963, b) 10% correction from life highs (15432) measures around 13900

* In the coming session, follow through strength above Thursday’s high (spot-14425) would lead to acceleration of upward momentum, else consolidation amid stock specific action. Hence, use intraday dip towards 14300-14325 to create long for target of 14413.

Nifty Bank: 31112

Technical Outlook

• The daily price action formed a bullish engulfing candle signalling strong buying demand near the support area of 30500 . The index recovered its entire previous session decline and closed near the high of the session (31834 ) highlighting steady up move throughout the session

• Goining ahead we expect the index to continue with its current consolidation in the broad range of 32500 -30500 . Only a firm close above 32500 will signal extension of the current pullback towards 34000 levels in the coming weeks

• Key point to highlight is since March 2020 bottom, the index has a maintained rhythm of not correcting for more than 21%. In the current scenario, the index is seen forming higher base after correcting 19 % from the all time high (37708 ) . Bank Nifty in the last seven sessions has rebounded three times after testing the support area of 30500

• The index has strong support in the range of 30500 -30000 levels being the confluence of the following technical observations : a) Price equality with the average of the previous two major correction in the last one year signals strong support around 30000 levels b)The rising long term 200 days EMA is also placed around 29850

• The last 10 weeks corrective decline has lead to the weekly stochastic placed near the oversold territory with a reading of 22 indicating an impending pullback in the coming weeks .

• On the higher side 32500 is likely to act as immediate hurdle being the high of previous week and the bearish gap area of 12th April 2020 placed around 32500 levels .

• In the coming session, the index is expected to open on a soft note on the back of negative global cues . We expect the index to continue with its previous session pullback . Hence, use dips towards 31500 -31570 for creating long position for the target of 31790 , maintain a stoploss of 31380

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