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Nifty

Technical Outlook

* The index started the session on a positive note. However, Nifty failed to sustain above lower band of Monday’s negative gap 17327-17156 and subsequently consolidated in the vicinity of psychological mark of 17000. as a result, daily price action formed a bear candle carrying lower high-low, indicating continuance of corrective bias

* The lack of follow through strength signifies extended breather. Key point to highlight is that, past two weeks 1150 points decline hauled daily and weekly stochastic oscillator in oversold territory with a reading of 6 and 20, respectively indicating possibility of technical pullback from oversold conditions cannot be ruled out. Going ahead, we expect supportive efforts to emerge around key support zone of 16800-16700 amid elevated volatility ahead of Monthly expiry week coupled with RBI policy. Meanwhile, on the upside, 17500 would act as immediate hurdle as it is 50% retracement of past two weeks decline (18096-16942).

* Structurally, over the past five weeks index has retraced merely 38.2% of preceding nine week’s rally (15185-18000) while absorbing global volatility, signifying inherent strength and relative outperformance against global peers that makes us believe, ongoing corrective move would find its feet around 16800-16700 zone as it is confluence of:

* A) 50% retracement of June-September rally of 15185-18000

* B) 52 week EMA is placed at 16760

* In line with the benchmarks, broader market indices retraced 38% of past two months ~30% rally. We believe, ongoing healthy retracement would help broader market indices to cool off overbought conditions and set the stage for next leg of up move

* In the coming session, index is likely to witness gap down opening tracking weak global cues. Despite ongoing volatility, supportive efforts to emerge around 200 days EMA placed around 16880. Hence, use intraday dip towards 16805-16835 for creating long position for the target of 16922.

Nifty Bank

Technical Outlook

* The daily price action formed a bear candle with a lower high -low signaling continuation of the profit booking for the fifth consecutive sessions .

* Going ahead, we expect consolidation in broader range of 37700 -39500 levels ahead of the RBI policy and monthly expiry . Rupee movement will also be key monitorable in the coming week . We believe the current breather on account of global volatility should not be construed as negative rather should be used as a buying opportunity

* The last two week’s decline has led to index approaching extreme oversold territory with daily stochastic reading of 5 , hence a technical pullback cannot be ruled out in the coming sessions .

* Structurally , in the longer time frame 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

* The index has support around 37700 -38000 levels as it is the confluence of the 100 days EMA (currently placed at 37710 ) and the 50 % retracement of the major up move (34464 -41840 ) In the coming session index is likely to witness gap down opening tracking weak global cues . Hence after a negative opening use intraday pull back towards 37670 -37730 for creating long position for the target of 38040 , maintain a stoploss at 37538

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