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NSE (Nifty):14653

Technical Outlook

* The daily price action formed a sizable bull candle carrying higher high-low, indicating follow through strength. In the process, the index reclaimed 50 days EMA and closed above it after two weeks, indicating rejuvenation of upward momentum

* The formation of higher high-low backed by improving market breadth and across sector participation highlights inherent strength that augurs well for the index to march towards upper band of falling channel placed at 14800 in coming weeks

* Key point to highlight is that, Nifty, Bank Nifty has maintained rhythm of not correcting more than 9% and 20%, respectively since March 2020, highlighting broader bullish structure is intact. Hence, any dip from here on owing to expiry induces volatility should be capitalised to accumulate quality large and mid caps as we expect stock specific action to continue amid ongoing Q4FY21 result season

* The small cap index has shown resilience as it is just a percentage away from its 52 weeks high compared to Nifty and Nifty midcap which is 5% and 3% away, respectively. We believe past two months consolidation has helped Nifty midcap and small cap indices to form a higher base above its 50 days EMA, which has been held since June 2020, highlighting inherent strength. We expect both indices to regain momentum and eventually accelerate its relative outperformance against benchmark in coming weeks

* Structurally, key support is placed at 14200. Only a breach below 14200 (on a closing basis) 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, index is likely to open on a flat note amid muted global cues. we expect index to trade with a positive bias while maintaining a higher high-low, highlighting elevated buying demand. Hence, use intraday dip towards 14610-14635 to create long for target of 14724.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 32735

Technical Outlook

* The daily price action formed a strong bull candle which maintained higher high -low for a third consecutive session signalling positive bias as the index in line with our expectation resolve above past two weeks high (32325), indicating rejuvenation of upward momentum

* Going ahead, we expect it to gradually head towards 34000 levels in the coming weeks as it is the confluence of the 50 % retracement of the entire decline (37708 -30405 ) and measuring implication of the last two weeks consolidation range breakout (32325-30405). Thereby, expiry induces volatility from here on should be capitalised to accumulate quality banking stocks

* Key point to highlight is since March 2020 bottom, the index has maintained rhythm of not correcting for more than 20 % . 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 two weeks has rebounded three times after testing the support area of 30500 . Hence the index is poised at crucial support and provides favourable risk -reward setup

* 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 29890 levels

* The daily stochastic is in up trend as can be seen in the adjacent chart thus supports the positive bias in the stock

* In the coming session, the index is expected to open on a flat to positive note on the back of firm global cues . We expect the index to continue with its last four session pullback and continue to form higher high -low . Hence, use dips towards 32640 -32710 for creating long position for the target of 32940 , maintain a stoploss of 31540

Nifty Bank Index – Daily Candlestick Chart

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