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NSE (Nifty):15728

Technical Outlook

* The index failed to sustain above Wednesday’s high(15894) and gradually headed southward as the session progressed. The daily price action formed a bear candle carrying lower high-low, indicating breather amid profit booking in recently ran up stocks. In the process, Nifty midcap and small cap relatively outperformed as it scaled to fresh all time high

* Key point to highlight is that, the index has been witnessing stiff resistance near upper band of contracting range (15900) as it failed to sustain above 15900 on fourth occasion since June 2021. However, the formation of subsequent higher lows during ongoing consolidation (15900-15500) exhibit buying demand at elevated support base. The last decline of 280 points was narrower compared to mid-June decline of 450 points, highlighting contraction of trading range. Therefore, index need to sustain above 15600 levels to keep ongoing contraction pattern intact, else extended correction amid stock specific action as we enter the Q1FY22 earning season.

* We expect ongoing corrective phase to remain shallower compared to end of June decline (280 points). Therefore, dips should be capitalised as incremental buying opportunity as we expect index to gradually resolve above 15900 and head towards our target 16100 in coming weeks as it is confluence of:

* 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 broader market indices relatively outperformed the benchmark as Nifty midcap and small cap scaled to fresh all time high. We believe, the broader market indices have formed a higher base that has set the stage for next leg of up move. We expect broader market to endure its relative outperformance 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) past four week’s low is at 15450 In the coming session, index is likely to witness gap down opening tracking weak global cues. However, we expect, index to attempt a pullback post initial dip. Hence, use intraday dip towards 15610-15632 to create long for target of 15723.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35274

Technical Outlook

* The daily price action resulted in a bear candle signalling profit boking at the higher band of the last four weeks consolidation range (35800 -34000 ) . The index is currently seen testing the recent falling channel breakout area containing last four weeks corrective decline, sustaining above which will keep the bias positive . Failure to do so will lead to extended consolidation

* Overall trend continues to remain positive and we expect the index to gradually head towards 36200 levels in the coming weeks as it is the confluence of the 80 % retracement of the February – April 2021 decline (37708 -30405 ) that coincide with price parity of late April swing (30405 -34287 ) as projected from the recent trough of 32115

* On a smaller time frame the index has witnessing 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 -35576 ) placed at 34500 levels

* (b) The value of the rising demand line joining major lows since May 2020 is placed around 34550

* (c) The rising 50 days EMA is also placed at 34570 levels

* In the coming session, the index is likely to open on a negative note amid soft global cues . Volatility is likely to be high on account of the volatile global cues, we expect the index to consolidate around 35000 levels . Hence use intraday dips towards 35050 -35120 , for creating long position for target of 35340 , maintain a stoploss of 34950.

Nifty Bank Index – Daily Candlestick Chart

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