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NSE (Nifty): 14708

Technical Outlook

* The daily price action formed an inside bar as the index oscillated within Monday’s trading range (15010-14635), indicating breather with a stock specific action amid oversold placement of daily stochastic oscillator (placed at 10) after ~800 point decline

* The index is undergoing healthy retracement as it retraced ~50% of post Budget rally, wherein we do not expect the index to breach the key support threshold of 14300. Meanwhile, to confirm the pause in downward momentum the index needs to form a higher high-low and decisively close above immediate resistance of 14900. Failure to do so would lead to extension of ongoing breather amid stock specific action. Hence, buy on dips strategy in quality large cap and midcap stocks should be adopted as the broader structure remains positive

* The ongoing healthy retracement would make market healthy from a larger term perspective and pave the way for the next leg of up move in coming weeks. Our constructive bias on the market is based on following observations:

* a) since May 2020, the index has not sustained below its 50 days EMA. That subsequently offered a fresh entry opportunity. Currently, the 50 days EMA is placed at 14337

* b) Price wise, the index has not corrected for more than 8- 9%. In the current scenario, 8% correction from life-time highs would be at 14200

* c) Time wise, secondary correction has not lasted for more than a week, since May 2020

* On expected lines, relative outperformance of broader markets endured, gaining 1% each. We expect catch up activity to be seen in small caps as the midcap index is consolidating around life-time highs, whereas small cap index is still 16% away from its life-time highs

In the coming session, Nifty future is likely to open on a positive note amid mixed global cues. We expect index to hold above Tuesday’s low (spot-14652) and trade with a positive bias. Hence, use intraday dip towards 14705-14732 to create long position for target of 14819.

NSE Nifty Daily Candlestick Chart

Bank Nifty: 35117

Technical Outlook

* The daily price action formed a small bear candle with a lower high -low signalling continuation of the breather for the sixth consecutive sessions after the recent sharp rally

* Going ahead, we believe extended correction from here on would offer an incremental buying opportunity as we do not expect the index to breach the key support threshold of 34000 . Hence, any dip from here on should not be construed as negative . Instead it should be capitalised on to accumulate quality banking stocks in a staggered manner . Our positive bias on the index in based on the following pricewise and time wise observations : (a) since October 2020 , time wise the intermediate correction has not lasted for more than a 6 - 8 sessions . (b) Price wise correction has been in magnitude of 8 -10 %

* In the current scenario, the index has already seen a decline of six sessions and has corrected by 7 % . Hence we expect the index to maintain the rhythm of aforementioned price and time wise correction and buying demand to emerge around 34500 -34000 levels • On the higher side the index has immediate resistance at 36350 being the 50 % retracement of the current breather (37708 -34976 )

* The key support threshold of 34500 -34000 , is the confluence of the following observations : a) The 50 % retracement of the budget rally (30906 -37708 ) placed at 34307 b)The price parity with the previous major correction (32842 -29688 ) as projected from the recent all time high (37708 ) signals major support around 34000 levels

* I n the coming session, the index is likely to open on a positive note . We expect the index to hold above previous session low (34988 ) and witness a pullback after last six consecutive session decline . Hence after a positive opening use dips towards 35060 - 35120 for creating intraday long position for the target of 35340 , maintain a stoploss at 34960

Bank Nifty Index – Daily Candlestick Chart

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