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Nifty : 16912

Technical Outlook

* The index extended its southbound journey over second consecutive session as intraday pullbacks were short lived. As a result, daily price action formed a sizable bear candle carrying lower high-low, indicating extended breather in the vicinity of 100 days EMA that offered incremental buying opportunity on couple of occasions since June 2020.

* Going ahead, we expect prolongation of consolidation in the range of 17500—16800 amid stock specific action that would help index to form a higher base around 100 days EMA. Thus, extended breather from hereon should not be construed as negative instead dips should be capitalised to accumulate quality stocks as we expect buying demand to emerge at lower band of consolidation placed around 16800-16700 zone as it is confluence of:

* a) since May 2020, index has not corrected for more than 10%. In current scenario, 10% correction from life high of 18600 will mature at 16740

* b) In all 3 corrections since May 2020, index retraced 38% of preceding rally. 38% retracement of current rally is placed at 16900

* During last week’s pullback index failed to sustain above 50 days EMA which will not act as Immediate resistance as it is confluence of:

* a) 50% retracement of recent decline (18210-16782) at 17496.

* b) Last week’s high is placed at 17490

* The Nifty midcap and small cap indices are sustaining well above its 100 days EMA which has been held since June 2020, highlighting inherent strength. We believe, ongoing consolidation will make market healthy and form a higher base. Therefore, focus should be on accumulating quality stocks to ride structural uptrend.

* In the coming session, the index is likely to open on a positive note tracking firm global cues. However, we expect volatility to remain high owing to escalating global volatility. Hence, use dips towards 16905-16935 for creating long position for target of 17022

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35735

Technical Outlook

* The daily price action formed a bear candle with a lower high -low signaling corrective decline for the second consecutive session after previous week pullback ahead of the RBI monetary policy outcome on Wednesday . The index in the last two weeks is seen forming a base around the 200 days EMA (currently at 35345 ) 

* Going ahead, we expect the index to continue with its consolidation in the broad range of 35300 -37100 , thus forming a base around the 200 days EMA . Hence dips should be used as a buying opportunity in quality banking stocks in a staggered manner

* Nifty Bank has immediate support at 35300 levels being the confluence of the 200 days EMA and the 80 % retracement of the August -October 2021 rally (34115 -41829 )

* For a sizable pullback to materialize in the index it need to start forming higher high -low in the daily chart on a sustained basis and close above the immediate hurdle of 37100 levels

*• The index since April 2020 in major corrective phase has taken 6 - 8 weeks, with six weeks of corrective decline already behind us we expect the index to form a base in the coming couple of weeks

* On the higher side last Friday’s gap down area of 37100 which also confluence with the 38 . 2 % retracement of the November decline (40160 -35328 ) is likely to act as immediate hurdle for the index

* In the coming session, index is likely to open on a positive note amid firm global cues . Volatility is likely to remain high on account of the volatile global cues as the index forms a base around the 200 days EMA . Hence after a positive opening use intraday dips towards 35790 -35870 for creating long position for the target of 36130 , maintain a stoploss at 35680.

Nifty Bank Index – Daily Candlestick Chart

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