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NSE (Nifty): 14815

Technical Outlook

*The daily price action formed a high wave candle carrying higher high-low after six sessions, indicating conclusion of corrective phase. In turn, this suggests resumption of primary up trend. Meanwhile, shadows on either side highlight elevated volatility ahead of the monthly derivative expiry

*Going ahead, we expect the index to trade with a positive bias and gradually head towards the upper band of consolidation at the psychological mark of 15000. Key point to highlight is that, the Bank Nifty has regained upward momentum, which would drive Nifty higher as it carries 40% weightage in the benchmark. The improving market breadth along with rotation of sectoral leadership signifies inherent strength that augurs well for durability of ongoing up move. Meanwhile, 14400 would continue to act as a strong support. Hence, capitalising on dips as an incremental buying opportunity in quality large cap and mid cap would be the prudent strategy to adopt for riding the next leg of up move

*Broader market indices extended gains over a third consecutive session after bouncing from 50 days EMA, which has been held on multiple occasions since June 2020. In the process, the Nifty midcap and small cap indices maintain the rhythm of not correcting for more than 9-10%. In the current scenario also buying demand emerged after correcting 8-9% while sustaining above 50 days EMA, indicating inherent strength. Hence, we believe broader market would regain upward momentum and relatively outperform the benchmark

*Structurally, we believe the Nifty has strong support at 14400, as it is confluence of:

a) 61.8% retracement of post budget rally (13662-15432), at 14338

b) Friday’s panic low is placed at 14350

c) positive gap seen on February 2 (14469-14281)

*In the coming session, the index is likely to open on a subdued note tracking muted global cues. We expect it to pullback after initial dip and trade with a positive bias. Hence, use intraday dip towards 14708-14735 to create long position for target of 14824.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 34184

Technical Outlook

*The daily price action formed a bull candle with a higher high - low signalling strong buying demand near the crucial support area of 33300

*Going ahead , a follow through strength above Tuesdays and last Fridays almost identical high (34360 ) will signal extension of the current pullback towards the 35000 levels in the coming sessions . Failure to do so will lead to a choppy consolidation ahead of the monthly F&O expiry on Thursday . A formation of higher high -low in the daily chart on a sustained basis and a firm closing above 35000 levels would signal a resumption of the primary up trend

*The immediate support for the index is currently placed at 33300 levels being the confluence of the following technical observations :

a) The 61 . 8 % retracement of the budget rally (30906 -37708 ) is placed at 33400 levels

b) The last Friday’s panic low is placed at 33361

c) The lower band of the rising gap area of 2nd February 2021 is also placed around 33300 levels

*The overall structure in the index remain positive as it has already taken 24 sessions to retrace just 61 . 8 % of preceding 11 sessions sharp up move (30906 -37708), at 33500 . The slower pace of retracement signifies healthy retracement and a higher base formation

*In the coming session, the index is likely to open on a negative note on back of soft global cues . We expect the index to trade in a range while holding above Tuesday’s low (33635 ) . Hence after a negative opening use dips towards 33780 -33840 for creating intraday long position for the target of 34060 , maintain a stoploss at 33670

*Among the oscillators, th e daily stochastic has generated a buy signal moving above its three periods average and is in up trend thus supports the positive bias in the index

Nifty Bank Index – Daily Candlestick Chart

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