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Nifty eyeing All Time High…

Technical Outlook

• The index resolved higher and posted highest weekly closing in five months. As a result, weekly price action formed a strong bull candle carrying higher high-low, indicating acceleration of upward momentum.

• Going ahead, we reiterate our constructive stance and expect Nifty to gradually retest the life time highs of 18887 in coming month. In the process, we expect broader market to relatively outperform underpinned by 18 months consolidation breakout leading Midcap index to clock a fresh All Time High. Thus, any dip from hereon should be used to build quality portfolio from medium term perspective. Our positive stance is further validated by following observation:

• A)The breakout from ongoing consolidation (18500-18000) helped index to settle at five months high, indicating acceleration of upward momentum.

• B)During recent consolidation market breadth has significantly improved supported by across sector participation as currently 62% of the stocks are trading above 200 days SMA compared to April end reading of 48%, highlighting broader market participation

• C)FII’s continued their buying spree in May with 25k Cr inflows despite dollar index inching up by 3%. We expect dollar index to face strong hurdle at 105 in coming weeks

• Sectorally, we expect stocks from BFSI, IT, Auto ancillary, capital goods and discretionary to lead the outperformance

• On stock front, in large cap we prefer Reliance, SBI, TCS, Maruti Suzuki, United Spirits, Titan, DLF are in focus while in midcap Coforge, L&T finance, Gabriel India, Syngene, KEC, Siyaram Silk Mills, PI Industries, IDFC First Bank remain in focus

• The Midcap index logged a breakout from eighteen months consolidation and recorded fresh all time high, indicating resumption of structural up trend. In the process, small cap index is still 17% away from its All Time High. Thus, we expect broader market to relatively outperform the benchmark in coming weeks

• Structurally, formation of higher high-low on the monthly chart signifies elevated buying demand that makes us confident to revise support base at 18200 as it is 80% retracement of current up move (18060-18508) coincided with 20 days EMA placed at 18198

• In the coming session, the index is likely to open gap up amid strong global cues after U.S. leaders reached a tentative debt ceiling deal. Nifty is seen breaking above last two weeks range 18000-18500 and is expected to trade with positive bias. Hence, create long position in the range of 18620-18653 for the target of 18737, maintain stoploss at 18583.

Nifty Bank: 44018

Technical Outlook

• The weekly price action formed a high wave candle with a long lower shadow signalling consolidation around the 44000 levels for the second consecutive week after the recent strong up move of 15 % points in the last two months

• Going ahead, we expect the index to surpass the all -time high of (44151 ) and gradually head towards 44900 levels in the coming weeks being the measuring implication of the last nine sessions range (44150 -43400 ) . However, the up move towards 44900 would be in a non -linear manner as bouts of volatility after last two months strong up move cannot be ruled out, dips should be used as a buying opportunity

• Key observation in the weekly chart of Bank Nifty is that it has witnessed a faster retracement of the 14week decline (44151 -38613 ) during Dec22 -Mar23 in just seven weeks . Faster retracement in just half the time interval indicating structural improvement from medium term perspective

• On relative terms, Bank Nifty continues to outperform the Nifty . The Bank Nifty/Nifty ratio line continues to trend higher and maintain higher high -low signalling extended period of outperformance

• The index has immediate support at 43400 levels being the confluence of the last two weeks identical lows and the 50 % retracement of the recent up move (42582 -44151 )

• Among the oscillators, the weekly 14 periods RSI remain in uptrend thus supports the overall positive bias in the index 3

• In the coming session, the index is likely to open gap up amid strong global cues after U . S . leaders reached a tentative debt ceiling deal . Index to open above previous all time high (44151 ) and extend its up move . Hence, create long position in the range of 44100 -44170 for the target of 44430 , maintain stoploss at 43990

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