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NSE (Nifty): 18017

Technical Outlook

* The index gradually recovered intraday losses post gap down opening and settled above psychological mark of 18000 over third consecutive session. The daily price action formed a high wave candle carrying lower high-low, highlighting breather amid stock specific action

* Going ahead, we expect the ongoing consolidation (18200-17700) of the index to get prolonged amid stock specific action that would make market healthy. Key point to highlight is that, over past 18 months is that, on multiple occasions higher base formation in the vicinity of 50 days EMA offered a fresh entry opportunity. As a result, buy on dips strategy worked well. In current scenario, past four weeks decline helped weekly stochastic to approach towards oversold territory (placed at 30) while sustaining above 50 days EMA, highlighting healthy retracement that would pave the way for next leg of up move. Hence, ongoing corrective phase around 50 days EMA should not be construed as negative, instead dips should be capitalised on to accumulate quality stocks

* The broader market indices have formed a higher base above 50 days EMA that has been held since June 2020 and retraced 61.8% of last decline, highlighting robust price structure. We expect, both indices to extend their ongoing pullback. Hence, focus should be on accumulating quality midcaps to ride next leg of up move 

* Structurally, the formation of higher trough above 50 days EMA highlights strength that makes us believe ongoing breather would find its feet around key support threshold of 17500-17600 as it is confluence of: a) 50 days EMA is placed at 17648 b) October 2021 low is placed at 17452

In the coming session, the index is likely to open on a muted note tracking subdued global cues. We expect index to prolong the ongoing consolidation amid elevated volatility owing to weekly derivative expiry. Hence, use dip towards 17930-17965 for creating long position for target of 18045

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 39023

Technical Outlook

* The daily price action formed a bear candle with a lower high -low signaling continuation of the corrective consolidation for the third session in a row around the 39000 levels

* Key observation is that the index since April 2021 has not corrected for more than three to four consecutive sessions, with three sessions of decline already behind us, we expect the index to maintain the rhythm and witness a rebound in the next couple of sessions

* W e expect the index to hold above the recent panic low of 38400 on a closing basis and continue to consolidate in the broad range of 38400 -40500 in the coming week .

* 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 on multiple occasions in the last 16 months . We expect the index to form a higher base around 50 days EMA (currently placed around 38373 ) 

* The short term support base for the index is placed at 38400 levels being the confluence of the following technical observations :

* 61 . 8 % retracement of the recent up move (36876 -41829 ) placed at 38620 levels

* the upper band of the recent seven months range breakout area

* the rising 50 days EMA is also placed at 38373 levels

* In the coming session, index is likely to open on a negative note amid subdued global cues . We expect, the index to trade in a range amid weekly expiry lead volatility . Hence, use intraday dips towards 38830 -38890 for creating long position for the target of 39140 , maintain a stoploss of 38710.

Nifty Bank Index – Daily Candlestick Chart

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