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Nifty: 17325

Technical Outlook

* After a gap down opening (17355-17283) the index found support in the vicinity of 50% retracement of past four session’s up move (16892-17640) and witnessed a choppy consolidation. As a result, the daily price action formed a high wave candle carrying lower high-low, indicating extended breather amid stock specific action

* We believe the index is undergoing healthy retracement of past four session’s up move (16892-17640), which will help it to form a higher base around 16900-17000 ahead of US Fed meeting that would set stage to ultimately resolve above higher band of consolidation at 17500. Therefore, extended breather from here on should not be construed as negative. Instead it should be used as incremental buying opportunity to accumulate quality stocks. Our constructive thesis is based on following observation:

* a) price wise index has maintained the rhythm of not correcting for more than 11% since May 2020. Time wise, the index has arrested secondary correction within nine weeks. In the current scenario, with eight week’s correction along with 10% correction behind us we believe the index would eventually witness a breakout from past two week’s consolidation

* b) Current rally from last week’s low (16782-17543=761 points is now bigger than early November pullback (17613-18210=597 points) supported by across sector participation, indicating structural improvement

* Our projection of target of 18000 is confluence of: a) 61.8% retracement of entire decline since October high (18600-16782) is placed at 16900 b) Implicated target of past two weeks consolidation (17500-16900) is placed around 18000 

* We expect, broader market indices to extend their relative outperformance as they have resolved out of strong base formation near 50-dema with improvement in market breadth as currently 52% of midcap index components are trading above 50 days EMA compared to past two past week’s reading of 35, highlighting rejuvenation of upward momentum.

In the coming session, the index is likely to open on a flat note tracking muted global cues. We expect, index to extend the ongoing consolidation amid stock specific action. Hence use dip towards 17248- 17273 for creating long position for target of 17365

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 36894

Technical Outlook

* The daily price action formed a high wave candle signaling continuation of the consolidation for the fourth consecutive session after last two weeks up move of 2000 points . Volatility is likely to remain high ahead of the FOMC meeting outcome on Thursday .

* Going ahead, we expect the Nifty Bank to undergo healthy retracement after recent pullback and form a higher base around the 36000 -36500 levels that would set stage for an eventual resolve above Monday’s high (37581 ) and head higher towards 38500 levels in the coming weeks being the confluence of the previous breakdown area and 50 % retracement of the entire decline (41829 -35328 ) . Hence any dip in ongoing week should not be construed negative rather an incremental buying opportunity to accumulate quality stocks

* The index has seen a rebound during previous week after 6 weeks of corrective decline thus maintained the rhythm of rebounding after 6 - 8 weeks of corrective phase as seen since April 2020 signaling continuation of the overall positive structure

* Nifty Bank has immediate support at 35300 levels being the confluence of the following technical observations :

* (a) 200 days EMA placed at 35360 levels

* (b) The 80% retracement of the August -October 2021 rally (34115 -41829 ) is also placed at 35300 levels

* Among the oscillators the daily 14 periods RSI is placed near its nine periods average signals continuation of the consolidation in the coming sessions

* In the coming session, index is likely to open on a flat note amid mixed global cues . We expect the index to continue with its consolidation around the 37000 levels amid high volatility . Hence use intraday dips towards 36810 -36880 for creating long position for the target of 37140 , maintain a stoploss at 36680.

Nifty Bank Index – Daily Candlestick Chart

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