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Nifty: 17248

Technical Outlook

* The index pared initial gains and subsequently oscillated in 100 points range, indicating choppy consolidation. The daily price action formed a small bear candle, indicating extended breather. The sizable lower shadow signifies supportive efforts emerged in the vicinity of 100 days EMA. Over past four sessions the Nifty has retraced 61.8% of preceding four session’s up move (16892- 17640), indicating slower pace of retracement

* We believe the Nifty is undergoing a strong base formation around 16800-17000 zone after completing price-wise correction of 10% from life highs of 18600. Currently, the index is approaching maturity of time-wise correction as we approach the ninth week of correction, that makes us believe the index would gradually resolve out of upper band of consolidation at 17500 and eventually head towards psychological mark of 18000 in coming weeks. Therefore, any dip from here on should be capitalised on as incremental buying opportunity to accumulate quality stocks. Our earmarked target of 18000 is projected on the basis of: a) 61.8% retracement of entire decline since October high (18600- 16782) is placed at 16900 b) Implicated target of past two weeks consolidation (17500-16900) is placed around 18000

* Our constructive thesis is based on following observation:

* a) price wise index has maintained the rhythm of not correcting for more than 11% since May 2020. Time wise, the index has arrested secondary correction within nine weeks.

* b) Current rally from last week’s low (16782-17543=761 points is now bigger than early November pullback (17613-18210=597 points), indicating structural improvement

* The broader market indices have taken a breather after showing relative outperformance over past two weeks. Currently, both indices are forming a higher base above 50 days EMA, indicating healthy consolidation that would set the stage for next leg of up move.

* In the coming session, the index is likely to open on a subdued note tracking muted global cues. We expect, index to regain momentum and trade with a positive bias while sustaining above past two sessions identical low of 17190. Hence use dip towards 17235-17265 for creating long position for target of 17347

NSE Nifty Weekly Candlestick Chart

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Nifty Bank: 36548

Technical Outlook

* The daily price action formed a bear candle with a higher high and lower low signaling continuation of the overall consolidation for the sixth consecutive session after last two weeks up move of 2000 points .

* Going ahead, we expect the Nifty Bank to continue with its healthy retracement after recent pullback and form a higher base around the 36000 levels that would set stage for an eventual resolve above Monday’s high (37581 ) and head higher towards 38500 levels in the coming weeks being the confluence of the previous breakdown area and 50 % retracement of the entire decline (41829 -35328 ) . Hence any dip in ongoing week should not be construed negative rather an incremental buying opportunity to accumulate quality stocks

* The index is seen forming a base after 6 weeks of corrective decline thus maintained the rhythm of rebounding after 6 - 8 weeks of corrective phase as seen since April 2020 signaling continuation of the overall positive structure

* Nifty Bank has immediate support at 35300 levels being the confluence of the following technical observations :

* (a) 200 days EMA placed at 35380 levels

* (b) The 80% retracement of the August -October 2021 rally (34115 -41829 ) is also placed at 35300 levels

* Among the oscillators the daily stochastic has cooled off from the overbought territory and is currently placed at a reading of 24 signaling continuation of the current consolidation in the coming sessions

* In the coming session, index is likely to open on a flat to negative note amid mixed global cues . We expect the index to continue with its last six sessions consolidation . Hence use intraday dips towards 36420 -36490 for creating long position for the target of 36740 , maintain a stoploss at 36290

Nifty Bank Index – Daily Candlestick Chart

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