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Nifty:17416

Technical Outlook

* The index gave up opening gains immediately to he ad down throughout the session as selling pressure accelerated post breach of 50-day EMA (17700), contrary to our expectations. Risk-off sentiment prevailed till end of session, resulting in a sizeable bear candle leading Nifty to settle at 10 week low. In short term, 50-day moving average at 17700 would act as a hurdle in case of pull backs

* Key observation is, over past 20 months bull market, there have been three major corrections (refer chart) which me asured average 9%. Currently, Nifty has already corrected 7 from life highs of 18600. Buying in each of these corrections provided handsome returns for investors as index eventually scaled back to new highs post such corrections. As we expe ct markets to maintain this rhythm, current correction should not be viewed negatively rather utilise to accumulate quality large and midcap companies as we expect Nifty to find strong buying de mand in 16900-17100 zone

* The broader market indices have also witnessed correction to the tune of 9% over past few weeks. Both midcap and small cap indices have maintained rhythm of corrections to the tune of 10% over past 20 months. WE believe this rhythm will be maintained and these indices will resume their bull trend post a decent higher base formation. Therefore we view ongoing correction as an incremental buying opportunity over medium term

* On oscillator front, daily and weekly stochastics has approached oversold trajectory with reading of 16 and 25 respectively. Such oversold readings favour a buying demand to emerge and support our structural positive stance

In the coming session, the index is likely to open on a negative note tracking weak global cues. We expect the intraday pullback in the index to be short lived as forming lower high-low. Hence, use pullback towards 17460-17485 for creating short position for target of 17371

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37128

Technical Outlook

* The daily price action formed a sizable bear candle with a small lower shadow . The index contrary to our expectations breached the support area of 37800 and witnessed extended decline onMonday’s session .

* Going ahead, a follow through weakness below Monday’s panic low (36655 ) will lead to extension of the decline towards 36000 levels being the 50 % retracement of the entire six months up move (30405 -41829 ) . Holding above Monday’s low will lead to a consolidation inthe broad range of 36600 -38200

* Key observation is that the index since April 2020 has not corrected for more than four -five weeks barring one instance . In the current scenario with four weeks of decline already behind us, we expect the index to maintain the rhythm and form a higher base in the coming sessions

* The overall structure in the index remain positive, hence we believe the current breather should not be seen as negative instead it should be capitalized to accumulate quality banking stocks for the next leg of up move . Buying on dips strategy has worked well onmultiple occasions inthe last 18 months

* On the higher side Monday’s high 38200 which also coincides with the 50 days EMA (currently placed at 38329 ) is likely to act as immediate hurdle forthe index

* The daily stochastic is placed at an oversold territory with a reading of 18 signaling supportive effort is likely at lower levels in the coming sessions

* In the coming session, index is likely to open on a negative note amid weak global cues . We expect, the index to trade with corrective bias as forming lower high -low . Hence use intraday pullback towards 37260 -37330 for creating short positionforthe target of 37020 , maintain a stoploss of 37440.

Nifty Bank Index – Daily Candlestick Chart

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