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Nifty

Technical Outlook

* The index started the weekly expiry session on a subdued note. However, buying demand from last session’s low helped it to recoup intraday losses and end the session on a flat note. The daily price action formed a small bull candle with higher higher-low, indicating continuance of upward momentum. Key point to highlight is that, the NSE Cash turnover has seen improvement by sustaining above its one months average at | 59000 crore compared to the start of July reading of | 44000 crore, indicating broad based participation

* Going ahead, we reiterate our positive stance and expect the Nifty to head towards our revised target to CY22 high of 18350 in coming weeks. However, the move towards 18350 would be in a zigzag manner as past five week’s 13% rally hauled daily and weekly stochastic oscillator in overbought conditions currently at 97, each. The secondary correction is a norm in a bull market. Hence, a temporary breather at higher levels should not be construed as negative. Instead, temporary breather should be capitalised on as incremental buying opportunity. Our constructive stance is further validated by following observations:

* a) Nifty, Nifty midcap indices have registered a bullish golden crossover (50-day EMA crossing 200-day EMA), Indicating positive development from a medium term perspective. Since 2008, in eight out of 10 such instances the Nifty has generated minimum 8% return in subsequent three to four months b) percentage of stocks above 200 day EMA has risen to 51% against a reading of 30% two weeks back and lowest reading of 14% at June lows. Sequential improvement in breadth using long term indicator signifies broad based participation in rally

* Key point to highlight is that, the Nifty midcap and small cap indices have logged a resolute breakout from downward slanting channel encompassing corrective move since October 2021, January 2022, respectively, indicating conclusion of corrective bias. This move is supported by significant jump in market breadth as currently 88% component of Nifty 500 universe is trading above 50 days SMA compared to July starting of 24% that augurs well for extension of ongoing rally.

* Structurally, prolongation of rallies underpinned by improving market breadth makes us confident to revise support base at 17500 as it is 61.8% retracement of most recent rally (17161-17968)

* In the coming session Index is likely to open on a flat to negative note tracking muted global cues. The formation of higher high-low signifies buying demand at elevated support base. Hence, use intraday dip towards 17888-17912 for creating long position for target of 17998

Nifty Bank

Technical Outlook

• The daily price action formed a bull candle which maintained higher high -low signaling continuation of the positive momentum .

• Going ahead, we expect the index to maintain positive bias and head towards the psychological mark of 40000 in coming sessions being the 80 % retracement of entire decline off October 2021 to June 2022 (41829 -32290 )

• Bank Nifty has relatively outperformed the benchmark index during the market correction and the subsequent pullback as can be seen in the Bank Nifty/Nifty ratio chart . It continues to remain in rising trend forming higher high -low and is seen sustaining above the recent falling supply breakout area joining highs since January 2021 highlighting strength and continuation of the outperformance

• Index after a sharp rally of more than 22 % in the just eight weeks has approached overbought condition in the daily and weekly stochastic oscillator (currently placed at a reading of 93 and 97 respectively) indicating possibility of temporary breather at higher levels cannot be ruled out . We believe any retracement of the recent up move from here on would make the market healthy and provides incremental buying opportunity . However, only a decisive close below last session low (39291 ) would lead to a breather, else continuation of upward momentum

• The formation of higher high -low on the weekly chart makes us confident to revise the support base higher towards 38000 levels as it is the confluence of the 11th August bullish gap area at 38200 levels and the 50 % retracement of the last four weeks up move (36248 -39703 ) placed around 38000 levels

In the coming session index is likely to open on a flat to negative note amid soft global cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence use intraday dips towards 39430 -39500 for creating long position for the target of 39760 , maintain a stoploss at 39320

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