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Technical Outlook

The equity benchmark edged higher while enduring its relatively outperformance against the global peers. The Nifty settled the week at 18534, up 25 points. In the coming session, the index is likely to open gap up amid strong global cues. We expect, index to regain upward momentum post recent breather above its 20 days EMA. Hence, use intraday dip in June future towards 18630-18663 to create intraday long positions for target of 18747 with a stoploss of 18593.

Going ahead, we reiterate our constructive stance and expect Nifty to gradually retest the life time highs of 18887 in next few weeks. In the process, we expect broader market to relatively outperform the benchmark and expect midcap index to rally ~25% in next three to four quarters based on following observations:

a)The midcap index recorded breakout from 18 months consolidation while small cap index has come out of one year consolidation, highlighting structural turnaround.

b)5-year consolidation breakout on Nifty Midcap 100 ratio line against Nifty 500, signifies acceleration in upward momentum of midcaps. Similar breakout in CY14 was followed by 25% rally in Nifty Midcap 100 over next 12 months

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