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Nifty :16771

Technical Outlook

* The index started the session on a positive note. However, profit booking from upper band of Monday’s gap area (16985- 16824) dragged the Nifty 250 points lower from day’s high of 16936. The daily price action formed a small bull candle carrying long higher shadow, highlighting breather after Monday’s sharp decline

* Despite Tuesday’s positive traction, the index failed to sustain above previous session’s high on a closing basis, highlighting corrective bias. Thus, key monitorable from here on would be sustainability above the psychological mark of 17000, which will be crucial for a meaningful pullback to materialise. Failure to do so would lead to prolonging of downward momentum. We believe 17000 would act as immediate hurdle as it is a confluence of Monday’s gap area of (16985-16824) coinciding with 50% retracement of ongoing corrective phase (17640- 16410) is at 17025

* Over the past six sessions, the Nifty has declined 1230 points, hauling daily and weekly stochastic oscillator around oversold territory. We expect volatility to gradually subside near oversold territory, which would help it to find supportive efforts in the range of 16300-16200 as it is confluence of:

* a) 200 days EMA is placed at 16292

* b) price parity of mid-November fall (18210-16782) is at 16255

* c) 50% retracement of April-October rally (14151-18604), at 16380

* The broader market indices are undergoing slower pace of retracement as over past nine weeks Nifty midcap, small cap indices have retraced 61.8% of preceding eight week’s rally. Slower pace of retracement signifies healthy retracement that would set the stage for next leg of up move.

In the coming session, the index is likely to open on a positive note tracking firm global cues. However, we believe Monday’s gap area of (16985-16824) would act as immediate hurdle. Hence use pullback towards 16954-16978 for creating short position for target of 16861

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 34607

Technical Outlook

* The daily price action formed a small bear candle which remained contained inside previous session price range signaling a breather after last three sessions sharp decline . Index need to start forming higher high -low in the daily chart on a sustained basis for any meaningful pullback to materialize

* Going ahead, index holding above Monday’s panic low (34018) will lead to a technical pullback towards 35500 levels in the coming sessions . However, failure to do so will lead to an extended correction

* Index after the sharp decline of 3500 points in the preceding six sessions has approached oversold territory and is placed around the price parity with the previous three major decline of around 20 % each in the last 20 months placed around 33400 -33000 levels . Going ahead, we expect the volatility to subside around the support area of 33400 -33000

* On the higher side immediate resistance is placed at 35500 levels being the confluence of the 200 days EMA (placed at 35470 ) and the upper band of the Monday’s gap down area

* Structurally, time wise index has maintained rhythm over past 20 months of not correcting for more than 9 weeks’ . In the current scenario we are already in the 9 weeks of correction . we expect ongoing corrective phase to mature in coming weeks as Index has approached oversold territory

* Among the oscillators the daily stochastic has approached oversold territory and is placed at the reading of 13

* In the coming session, index is likely to open on a positive note amid firm global cues . We expect, the initial pullback to remain short lived as index would face immediate resistance around 35100 . Hence use intraday pullback towards 35030 - 35100 for creating short position for the target of 34770 , maintain a stoploss at 35220.

Nifty Bank Index – Weekly Candlestick Chart

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