IGI Logo

Nifty

Technical Outlook

• The Nifty started the session on a flat note yet failed to sustain above 17800 mark and gradually drifted downward. As a result, daily price action formed a bear candle carrying lower high-low, indicating a breather

• In today’s session index is likely to witness gap down opening tracking weak global cues owing to Fed rate hike. The index has been consolidating in the broader of 18000-17300 amid stock specific action tracking elevated global volatility. The lack of faster retracement on either side signifies prolonging of consolidation. The ongoing healthy consolidation has helped index to cool off overbought conditions (daily and weekly stochastic oscillator cooled off to 43 and 58, respectively).Thus, extended breather should not be construed as negative instead dips should be capitalised on to accumulate quality stocks to ride next leg of up move towards January 2022 high of 18300. we reiterate our positive stance based on following observation:

• a) over past four weeks, the index has undergone slower pace of retracement by retracing merely 38.2% of mid July-August rally (15850-18000), thereby making market healthier

• b) Brent crude prices continue to trend downward after breaking their two-year support trend line. In coming weeks decisive break below 86 would lead further declines

• c) Indian equities continue to relatively outperform in the face of global volatility. Nifty 500 ratio against S&P 500 has given a breakout from decade long consolidation underscoring relative outperformance ahead

• Structurally, strong support for the Nifty is placed at 17300 which we do not expect to breach as it is 80% retracement of recent 11 sessions rally (17166-18096) coincided with 50 days EMA placed at 17349

• In the coming session, index is likely to witness gap down opening tracking weak global cues owing to Fed rate hike. Formation of lower high- lower low signifies corrective bias. Hence, use intraday pullback towards 17688-17712 for creating short position for the target of 17602

Nifty Bank

Technical Outlook

• The daily price action formed a high wave candle with a lower high -low signaling continuation of the consolidation of the fifth consecutive session ahead of the FOMC rate decision .

• The index is likely to open on a negative note amid weak global cues . We believe dips on account of global volatility should not be construed as negative rather should be used as a buying opportunity for up move towards 41800 levels . Index has strong support around 40000 -39800 levels

• Structurally , the index has witnessed a faster retracement as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting overall positive bias .

• In the weekly time frame after a strong rally of 29 % in just 13 weeks, index has approached overbought territory with a weekly stochastic reading of 83 . Hence, temporary breather cannot be ruled out after the recent strong outperformance which will make the overall trend healthier

• Bank Nifty continue to relatively outperformed the benchmark index in the last few quarters as can be seen in the Bank Nifty/Nifty ratio chart . It has recently generated a breakout above last 15 month’s range . Within the banking stocks PSU banking stocks has been resilient and showing relative strength . We expect the current outperformance to continue going forward

• The index has strong support around 39800 levels as it is the confluence of the 20 days EMA (currently placed at 39860 ) which has acted as strong support in the entire up move of the last two months and the 50 % retracement of the last three weeks up move (37944 -41840 ) In the coming session index is likely to open on a negative note amid weak global cues . We expect the index to trade in a range with corrective bias . Hence after a negative opening use intraday pull back towards 40980 -41070 for creating short position for the target of 40730 , maintain a stoploss at 41180

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer