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Nifty

Technical Outlook

• The index witnessed a gap up opening (17698-17797) during the truncated week and subsequently surpassed our target of 17900 on expected lines. However, profit booking from the psychological mark of 18000 mark led index to pare initial gains. As a result, weekly price action formed a shooting star like candle indicating breather after recent sharp up move

• In the upcoming expiry week, we expect he Nifty to consolidate near psychological mark of 18000 after strong rally of >13% over five weeks led prices to overbought trajectory (currently weekly stochastic oscillator is placed at 93). In the process, strong support is placed at 17400. Thus, dip from here on should not be construed as negative. Instead healthy retracement should be capitalised on to accumulate quality stocks to ride next leg of up move towards CY22 highs of 18350 in coming month. Our constructive stance is anchored on following observations:

• a) the index has resolved above long term trend line resistance in place since October highs, signaling resumption of primary uptrend

• b) Nifty registered a bullish golden crossover (50-day EMA crossing 200-day EMA) at 17660 indicating, structural bullish development from medium term perspective. Since 2009, in eight out of 10 such instances, the Nifty has generated average 11% return in subsequent three to four months

• c) percentage of stocks (Nifty500) rising above their long term 200-day moving average has seen sequential improvement. From June low reading of 14%, current reading has jumped to 52% indicating broad based nature of rally

• d) strength in Indian equities is well supported by strong correlation with developed market indices. S&P 500 is on the cusp of breakout from falling channel following similar breakout in Nasdaq index and broader Russell 2000 index, thus signalling end of corrective phase

• Sectorally, we expect BFSI, IT, Auto, Consumption and Capital goods to lead • Our preferred Large caps are SBI, Kotak Bank, HDFC, Infosys, Bharti Airtel, L&T, Titan while in midcaps we like Cyient, Bank of Baroda, Mahindra CIE, Action Construction, Bajaj Electrical , Tata Communications, Phoenix Ltd, TCI Express, Thermax, Zee Entertainment.

• The Nifty midcap index has registered a strong breakout from falling channel encompassing past eight month corrective phase signalling resumption of uptrend while Nifty small cap index is at the cusp of breakout and expected to follow midcap peers.

• Structurally, prolongation of rallies underpinned by improving market breadth makes us confident to retain support base at 17400 as it is 38.2% retracement of July-August rally (16438-17992)

• In the coming session, index is likely to witness a negative opening amid weak global cues. We expect the index to continue with its Fridays breather. Hence after a negative opening use intraday pullback towards 17795-17820 for creating short position for the target of 17705

Nifty Bank

Technical Outlook

• The weekly price action formed a small bear candle with a long upper shadow signaling breather after the recent sharp rally around the psychological mark of 40000 .

• In the coming expiry week, we expect index to consolidate in the broad range of 38000 -40000 after strong rally of 14 % in just five weeks which has led to overbought condition in the weekly stochastic oscillator (currently placed at a reading of 93 ) . We expect buying demand to emerge around the support area of 38000 hence use dips as an incremental buying opportunity

• We believe retracement of the recent up move from here on would make the market healthy and provides incremental buying opportunity

• Bank Nifty has relatively outperformed the benchmark index in the last few quarters as can be seen in the Bank Nifty/Nifty ratio chart . It continues to remain in rising trend forming higher high -low and is seen sustaining above the recent falling supply breakout area joining highs since January 2021 highlighting strength and continuation of the outperformance

• The index has immediate support around 38000 levels as it is the confluence of the 20 days EMA (currently placed at 37962 ) and the 50 % retracement of the last four weeks up move (36248 -39759 )

• In the coming session index is likely to open on a negative note amid weak global cues . We expect index to continue with its Friday’s breather after recent strong up move . Hence after a negative opening use intraday pullback towards 39080 -39150 for creating short position for the target of 38830 , maintain a stoploss at 39270

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