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Nifty

• The Nifty witnessed a gap down opening (18157-18044) tracking weak global cues and subsequently drifted downward. The daily price action formed a bear candle carrying lower high-low, indicating extended breather after recent sharp up move

• The sustenance above one year falling trend line despite volatile global cues makes us reiterate our structural positive stance and expect the Nifty to challenge the all-time high of 18600 in coming couple of week. The index is likely to witness gap up opening tracking strong rally in global market post outcome of US inflation data. In the process, US Dollar index decisively breached eight months rising channel coincided with key support of $110 that augurs well for acceleration of upward momentum in global equities. Thus, any dip from here on should be used as incremental buying opportunity as we do not expect index to breach the key support of 17800. Our positive stance on the market is further validated by following observations: a) Over the past two decades, Q4 returns for the Nifty have been positive (average 11% and minimum 5%) on 15 out of 21 occasions (70%). History favours buying dips b) India VIX, which gauges market volatility, has recorded five month’s range breakdown and is trading below 16, indicating low risk perception among market participants c) Indian equities continued to relatively outperform their global peers, showing inherent strength d) US indices oversold: Percentage of stocks above 200-dma for S&P500 and Nasdaq has approached bearish extreme of 15 and 12. Over two decades, readings below 15 and 12 have led to meaningful durable bottoms. We therefore expect US indices to pose technical pull backs from oversold readings

• Structurally, The formation of higher peak and trough supported by across sector participation makes us confident to retain support base upward at 17800 as it is 38.2% retracement of past three week’s rally 17100-18296

• The Nifty midcap and small cap indices resolved out of five weeks base formation above 52 weeks EMA. The rejuvenation of upward momentum in midcap and small cap segment signifies broader market participation that augurs well for durability of ongoing up move. We expect, broader market indices to accelerate upward momentum and witness catch up activity against the Nifty

• In the coming session, index is likely to witness gap up opening tracking buoyant global cues. Thus, after initial up move, intraday dip towards 18290-18322 should be used to create intraday long positions for target of 18412

Nifty Bank

• The daily price action formed a small bull candle as the index opened lower amid weak global cues . However, buying demand at lower levels saw the index recovering most of the intraday decline and closed the session marginally lower by 0 . 4 % . Index in today’s session opening gap up amid positive global cues highlighting continuation of the positive momentum

• Going forward, we reiterate our positive stance as we expect the index to extend the current up move and head higher towards 42900 levels in the coming weeks being the 123 . 6 % external retracement of the recent breather (41840 -37386 ) . Dips on account of global volatility should not be constructed as negative instead should be used as a buying opportunity

• Nifty PSU banking stocks are expected to continue to outperform . The PSU bank index has witnessed a strong up move post breaking above CY21 highs and past five years down trend line indicating strong structural uptrend . While large caps have seen strong traction, we expect smaller PSU banks to catch -up and witness strong upward momentum .

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength . It has recently generated a faster retracement on higher degree as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting robust price structure

• The Bank Nifty has support at 40300 mark being the confluence of the (a) 38 . 2 % retracement of the current up move (37387 -41948 ) placed at 40280 (b) the 10 weeks EMA currently placed at 40230 levels In the coming session, index is likely to open gap up amid strong global cues . We expect the index to continue with its positive momentum while forming higher high -low . Hence after a positive opening use intraday dips towards 42020 -42100 for creating long position for the target of 42370 with a stoploss at 41910

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