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Nifty

Technical Outlook

• On expected lines, buying demand emerged from the lower band of consolidation 16800 amid oversold conditions that helped index to resolve higher and form a bull candle carrying higher high-low after five weeks, indicating pause in downward momentum

• The index has logged a resolute breakout from recent consolidation 17200-16800 underpinned by gap up opening (17080-17210) in Friday’s session, indicating acceleration of upward momentum. In the upcoming truncated week, we expect index to resolve higher and head towards 17600 as it is confluence of 200 days EMA coincided with upper band of falling channel and the implicated target of consolidation breakout (17200-16800). Thus, any dip from hereon towards 17100 should be looked for accumulating quality stocks in a staggered manner as it is a good time to construct portfolio from medium term perspective. Our view of extended pullback is further validated by following observations:

• A) India VIX has decisively breached 14 levels indicating further cool off, which is positive for equities

• B) Global indices have outperformed YTD with Nasdaq leading (+18%) while European indices are up in mid-teens. The domestic market has positive correlation with global peers. Currently, Nifty is down 4% YTD and expected to catch up from hereon

• C) US dollar index trending down currently at 102.20 which is key global positive for EM equities.

• D) Historically, episodes of higher volatility, along with negative news flow and oversold prices has been a key ingredient for durable bottom formation as usually sentiment is at its bearing extremes in such scenarios • Sectorally, BFSI, IT, PSU, Capital goods and Infra, Auto to lead the rally

• On stock front, in large cap Kotak Mahindra Bank, SBI, HUL, L&T, LTI Mindtree, Ultratech Cement, Tata Motors, Bosch, Dr Reddy are in focus while in midcap Canara Bank, Trent, Lemontree, TWL, KEC, Abbott India, Balrampur Chini, JK Cement

• In spite of host of negative news, index has managed to hold the key support of 16800 highlighting strong support which would continue to act as key support as it is confluence of:

• a) September 2022 low is placed at 16747

• b) 61.8% retracement of CY22 rally 15183-18887, placed at 16600

• In the coming session, index is likely to open on a flat to positive note tracking firm global cues. We expect, index to endure its northbound journey while maintaining higher high-low formation. Hence, use intraday dip towards 17375-17408 to create intraday long positions for target of 17493 with a stoploss of 17338

Nifty Bank

Technical Outlook

• The weekly price action formed a sizable bull candle with a higher high -low signalling pullback on expected lines from the oversold territory

• Index during last week surpassed short term hurdle of 40200 with a gap up action, indicating acceleration in coming truncated week . We expect the index to head towards 41300 levels being the 80 % retracement of the February -March 2023 breather (42015 -38613 ) . With key support is placed at 39600 , dips should be used as a buying opportunity

• Bank Nifty/Nifty ratio line continues to trend higher and sustain the above major breakout area signalling continuation of the outperformance

• Structurally, ongoing corrective phase has already consumed 16 weeks to retrace 80 % gains of preceding 10 weeks rally of October –December (37387 -44151 ) . A slower pace of retracement signifies corrective nature of current decline

• The index has support at 39600 levels being the confluence last Wednesday’s low and the 50 % retracement of the last two weeks pullback (38613 - 40690 )

• The weekly stochastic is at the cusp of generating a buy signal moving above its three periods average thus supports continuation of the pullback in the index in the coming weeks

• In the coming session, the index is likely to open on a flat to positive note amid mixed global cues . Index is expected to consolidate its Friday’s gain and trade with positive bias . Hence use intraday dips towards 40540 -40620 for creating long position for the target 40870 , maintain a stoploss of 40430

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