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NSE (Nifty): 15738

Technical Outlook

* The daily price action formed an inside bar within previous session’s sizable bear candle (15800 – 15566). The lack of follow through to Wednesday’s profit booking signifies inherent strength. As a result, index maintained the rhythm of not correcting for more than 2-3 sessions in a row since mid-March 2021, highlighting continuance of positive bias

* We expect, index to trade with a positive bias and gradually head towards our earmarked target of 16100 in June 2021. However, we believe, move toward 16100 would be nonlinear in nature as bouts of volatility owing to overbought condition of weekly stochastic oscillator (currently placed at 96) can not be ruled out. Therefore, any dip from here on should be capitalised on as incremental buying opportunity in quality large caps as we believe strong support for the Nifty is placed at 15200

* Key point to highlight is that, the market breadth has been resilient as currently 91% components of Nifty 500 are trading above their 50 days EMA compared to May reading of 85%. The formation of higher high-low on the larger degree chart backed by improving market breadth signifies robust price structure that augurs well for durability of ongoing up move. Our earmarked target of 16100 is based on: a) Price parity of post budget rally (13597-15432), projected from April low of 14151, at 16055 b) Past two months consolidation (15140-14150) breakout target at 16120

* The broader market indices relatively outperformed the benchmark by gaining 1.6%, each compared to Nifty up 0.7%. We believe, extended breather from here on would make broader market healthy and set the stage for next leg of rally

* Structurally, we believe the index has formed a strong base at 15200 levels which we do not expect to breach as it is confluence of: a) 61.8% retracement of past three week’s rally (14885-15800), at 15235 b) past two week’s low is placed at 15145

* In the coming session, we expect index to resolve higher and challenge all time high of 15800. Hence, use intraday dip towards 15720-15745 to create long for target of 15828.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35131

Technical Outlook

* The daily price action formed a bull candle which remained enclosed inside previous session price range signalling a pause in the corrective decline of the last one week . A follow through strength above Wednesday high (35402 ) will signal a resumption of up move . Failure to do will lead to a higher base formation in the range of 35400 -34400 with stock specific action

* The index on Thursday session witnessed a rebound on expected lines as it maintained the rhythm of not correcting more than 2 - 3 consecutive sessions as seen since April 2021

* We believe the current breather after sharp 11 % up move in just three weeks should not be seen as negative instead it should be capitalised to accumulate quality banking stocks for the next up move towards 36200 in the coming weeks as it is the confluence of the 80 % retracement of the entire last three months corrective decline (37708 -30405 ) and the price parity with previous up move (30405 -34287 ) as projected from the recent trough of 32115 signalling upside towards 36200 levels

* The crucial support for the index is placed at 34400 -34000 levels as it is confluence of the

* (a) 38 . 2 % retracement of the current up move (32115 -35810 ) placed at 34400

* (b) the recent breakout area and the April high (34287 )

* (c) The rising 50 days EMA placed at 34005 levels

* In the coming session, the index is likely to open on a flat to positive note amid mixed global cues . We expect the index to trade with positive bias while sustaining above 35000 levels . Hence, Use intraday dips towards 35050 -35110 for creating long position for the target of 35340 , maintain a stoploss of 34940

* Among the oscillators the daily stochastic remain in downtrend, however it is approaching oversold territory with a reading of 24 , hence buying demand is expected at lower levels

Nifty Bank Index – Weekly Candlestick Chart

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