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NSE (Nifty): 18178

Technical Outlook

* The index pared initial gains and extended losses over third consecutive session. However, buying demand in the fag end of the session helped index to recoup intraday losses as index recovered 175 points from day’s low of 18048. As a result, daily price action formed a bear candle with significant lower shadow, indicating supportive efforts near psychological mark of 18000. in the process, Nifty retraced 50% of preceding 3 weeks rally

* Going ahead, sustaining above Thursday’s panic low around 18050 would be the key monitorable as holding above psychological mark of 18000 would lead to base formation. We expect index to gradually consolidate in the 18000-18600 range, wherein BankNifty would relatively outperform. The Bank Nifty has shown resilience and closed at fresh all time high, despite profit booking in the benchmark index. We believe, revived traction in banking stocks would drive index to retest the all time high of 18600 as Bank Nifty carries 37% weightage in Nifty

* Key point to highlight since April 2021 is that, price-wise index has not corrected for more than 3-4% while time-wise intermediate correction has got arrested within 3-4 days. In current scenario as index has already corrected 3% over past three sessions, we expect index to maintain the same rhythm. Thus, any dip from hereon should be capitalised on to accumulate quality stocks amid progression of Q2FY22 result season as we do not expect the Nifty to breach the key support zone of 17800 levels

* The Nifty midcap and small cap indices have witnessed 7% correction from their life time high. Both the indices have not corrected for more than 9-10%, since March 2020. We believe 2- 3% correction from hereon cannot be ruled out, which would make broader market healthy and set the stage for next leg of rally

* Structurally, the formation of higher peak and trough on the larger degree chart signifies robust price structure that makes us believe that ongoing breather would find its feet around 17800 as it is confluence of: a) 61.8% retracement of past three weeks up move (17452-18604) b) last week’s low is placed at 17839

In the coming session, the index is likely to open on a positive note tracking firm global cues. The formation of significant lower shadow in Thursday’s session signifies buying demand at lower levels. Hence, use dip towards 18175-18205 for creating short position for target of 18293

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 40030

Technical Outlook

* The daily price action formed a strong bull candle with a higher high -low signaling continuation of the positive bias as the index rebounded taking support at the bullish gap area of Monday (39375 -39570 ) highlighting strength .

* Going ahead, we expect the Bank Nifty to continue its outperformance over the Nifty and rally higher towards 40500 levels as it is the confluence of the measuring implication of the last three weeks range breakout (38300 -36500 ) and the 138 . 2 % external retracement of the entire major decline of February -April 2021 (37708 -30406 ) placed at 40500 levels

* Despite elevated global volatility and surge in crude oil prices, Bank Nifty has shown resilience by maintaining higher high - low in all time frame and rallying to a fresh all time high

* We expect the index to hold above the support area of 38300 and any breather would provides incremental buying opportunity in quality banking stocks

* Structurally, the formation of higher peak and trough in all time frames signifies robust price structure, that makes us confident to revise support base upward at 38300 levels as it is confluence of :

* The upper band of the last three weeks’ consolidation breakout area placed around 38300 levels

* 50 % retracement of the current up move 36877 -40200 is also placed around 38400 levels

* In the coming session, index is likely to open on a positive note amid firm global cues . We expect the index to continue with its positive bias as forming higher high -low in all time frame . After a positive opening use intraday dips towards 40080 -40140 for creating long position for the target of 40390 , maintain a stoploss of 39970

Nifty Bank Index – Daily Candlestick Chart

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