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Nifty: 17177

* Despite past two sessions sharp decline index witnessed elevated buying demand from 80% retracement of recent up move (16782-17490) and entirely recouped Monday’s losses. The absence of follow through to Monday’s corrective move, indicates dwindling downward momentum and augurs well for stability at current juncture. The daily price action formed a bull candle carrying higher high-low, signifying presence of buying demand near key supports

* Going ahead, we expect index to trade with a positive bias while sustaining above the key support threshold of 16800 mark and eventually challenge the upper band of consolidation placed at 17500 in coming weeks. Hence dips should be capitalized to accumulate quality stocks. Our constructive thesis is based on following observations: • A) The lack of faster retracement on the either side signifies prolongation of ongoing base formation in the range of 16800- 17500

* B) Sharp up move during Tuesday’ session was backed by across sector participation that augurs well for durability of structural uptrend

* C) Cool-off in domestic as well as global volatility signifies anxiety around Omicron impact is settling down which would help in healthy base formation and gradual move towards 17500 in coming weeks

* The Nifty midcap and small cap indices are sustaining well above their 100 days EMA which has been held since June 2020, highlighting inherent strength. We believe, ongoing cons olidation will make market healthy and form a higher base. Therefore, focus should be on accumulating quality stocks to ride structural uptrend.

In the coming session, the index is likely to witness gap up opening tracking firm global cues. We expect index to maintain higher highlow formation. Hence use dips towards 17232-17257 for creating long position for target of 17347.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 36618

Technical Outlook

* The daily price action formed a bull candle with a higher high -low signaling a strong pullback after last two sessions breather . The index overall continues to form a base around the 200 days EMA (currently at 35358 )

* Going ahead, we expect the index to continue with its consolidation in the broad range of 35300 -37100 . Only a sustained close above 37100 will open further upside in the coining sessions . Failure to do so will lead to continuation of the base formation around the 200 days EMA .

* Nifty Bank has immediate support at 35300 levels being the confluence of the 200 days EMA and the 80 % retracement of the August -October 2021 rally (34115 -41829 )

* The index since April 2020 in major corrective phase has taken 6 - 8 weeks, with six weeks of corrective decline already behind us we expect the index to form a base in the coming couple of weeks

* On the higher side last Friday’s gap down area of 37100 which also confluence with the 38 . 2 % retracement of the November decline (40160 -35328 ) is likely to act as immediate hurdle for the index

* Among the oscillators the daily stochastic is placed at the neutral reading of 50 highlighting continuation of the range bound consolidation in the coming sessions

* In the coming session, index is likely to open on a positive note amid firm global cues . Volatility is likely to remain high on account of the RBI monetary policy outcome . We expect the index to maintain higher high -low and trade with positive bias . Hence after a positive opening use intraday dips towards 36580 -36650 for creating long position for the target of 36910 , maintain a stoploss at 36460.

Nifty Bank Index – Daily Candlestick Chart

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