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NSE (Nifty): 15812

Technical Outlook

* The domestic bourses started Tuesday’s session with a positive bias and inched northward throughout the session. The daily price action formed a bull candle carrying higher high-low, indicating positive bias. In the process, banking heavyweights gained traction, highlighting rejuvenation of upward momentum which would drive Nifty higher as BFSI carries 38% weightage in the benchmark

* Going ahead, we reiterate our constructive stance and expect the index to challenge the upper band of consolidation (15900) as it approaches maturity of price/time wise correction and eventually head towards 16100 in coming weeks. Key point to highlight during past four weeks shallow retracement (15900-15500) is that, the market breadth has cooled off from the overbought conditions as currently ~80% components of Nifty 500 index are trading above 50 days EMA compared to mid June reading of 92%, highlighting healthy consolidation. In the process, the Nifty has digested the rally in crude oil prices and global volatility, signifying robust price structure. Time wise, we expect the Nifty to maintain the rhythm of not correcting for more than three consecutive weeks in a row observed since April 2020. Hence, dips should be capitalised on as incremental buying opportunity amid Q1FY22 earning season. Our earmarked target of 16100 is based on following observations:

* a) price parity of post Budget rally (13597-15432), projected from April low of 14151, at 16055

* b) past two month’s range (15140-14150) breakout target at 16120

* The Nifty midcap and small cap indices maintained their record setting spree, highlighting broader market outperformance. We expect broader markets to continue their northbound journey while maintaining higher high-low formation in coming weeks

* Structurally, we believe past five week’s consolidation helped index to form a higher base at 15600-15500 zone, which we do not expect to be breached as it is confluence of:

* a) 61.8% retracement of past four week’s rally (15145-15915), at 15440

* b) 10 weeks EMA placed at 15540 In the coming session, index is likely to open on a subdued note tracking muted global cues. We expect Nifty to trade with a positive bias amid rise in volatility. Hence, use intraday dip towards 15740-15765 to create long for target of 15853

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35673

Technical Outlook

* The daily price action resulted in a bull candle with a higher high -low signalling continuation of the up move as the index is seen outperforming the Nifty and is at the cusp of breaking above the last five weeks range 35800 -34000 highlighting resilience

* Going ahead, we expect the index to maintain positive bias and head towards 36200 levels in the coming weeks as it is the 80 % retracement of the February – April 2021 decline (37708 -30405 ) . Any minor pullback ahead of the weekly expiry provides incremental buying opportunity in quality large and midcap banking stocks

* On a smaller time frame the index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 - 35810 ) over past five weeks

* Key observation is price action has been contracting over past few sessions suggesting that breakout from this consolidation is approaching . We expect index to breakout on the higher side given shallow retracement and robust price structure

* The formation of higher high -low in the weekly time frame gives us confident to maintain the support base at 34500 being the confluence of the following technical observations :

* (a) The 61 . 8 % retracement of the recent up move (33908 -35811 ) placed at 34550 levels

* (b) The value of the rising demand line joining major lows since May 2020 is placed around 34580

* (c) The rising 50 days EMA is also placed at 34640 levels

* In the coming session, the index is likely to open on a flat to negative note amid soft global cues . Volatility is likely to remain high as we approach the upper band of the last five weeks consolidation . W e expect the index to trade with positive bias while maintaining higher high -low . Hence use intraday dips towards 35570 -35630 , for creating long position for target of 35870 , maintain a stoploss of 35460

Nifty Bank Index – Daily Candlestick Chart

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