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Nifty : 19428

Technical Outlook

* The index pared initial gains and settled the week on a subdued note after facing stiff resistance from downward slanting trend line drawn adjoining subsequent highs off July highs of 19991. As a result, weekly price action formed an inside bar within last week’s high wave candle, indicating extended breather

* We believe, past three week’s slower pace of retracement (four weeks rally of 18646-19991retraced by merely 50%) has made market healthy. The lack of faster retracement on either side signifies prolongation of ongoing consolidation in the broader range of 19900-19200 would set the stage for next up move.

* Key point to highlight since June 2022 is that, index has not witnessed negative candles for more than 3-4 weeks in a row. In current scenario, we expect index to maintain the same rhythm of time wise correction as Nifty has already corrected over past three weeks. Thus, buying on dips would be the prudent strategy as key support is placed at 19200 levels.

* Structurally, secondary correction is the part of the secular bull market. Thus dips should not be construed as negative, instead it should be used as incremental buying opportunity as we believe ongoing healthy retracement would find its feet around key support of 19200 being confluence of:

* a) 61.8% retracement of current up move (18645-19991), at 19160

* b) 50 days EMA is placed at 19242

* c) July month’s low is placed at 19234

* On the broader market front, the midcap index has continued to clock new All Time High over 12th weeks in a row, highlighting strength. However, past five months remarkable >30% rally hauled weekly stochastic oscillator in overbought territory while breadth indicator (% of stocks above 200 DMA) has approached overbought condition (placed at 91), suggesting possibility of temporary breather

* Sectorally, BFSI, Pharma, Power, PSU and metal will remain in focus in upcoming truncated week

* On stock front, in large cap we prefer Reliance Industries, TCS, Canara Bank, United Spirits, Tata Steel, Dr Reddy, Titan while in midcap Coforge, Union Bank, Exide Industries, Hudco, Jindal Steel and Power, CAMS, KNR Construction, KPR Mills, Kalpataru Power will remain in focus

Nifty Bank: 44199

Technical Outlook

* The price action during the week resulted in a sizeable bear candle with lower high -low sequence indicating continuation of corrective bias and helped prices to work out of overbought trajectory while discounting sticky inflation and status quo on interest rates in near future

* In the coming truncated week, we expect index to consolidate in the 43500 -45000 range as earnings season peters out and find strong buying support around 43800 -43500 as index is approaching maturity of price/time correction . We recommend to buy dips with more focus on PSU banks

* Key observations :

* 38 . 2 % retracement of entire rally since March lows (38613 -46369 )

* Value of rising 100 -day ema at 43829

* June swing low at 43345

* Time wise, since June 2022 lows index has not formed more than three consecutive bear candles . With three bear candles behind us we expect index to bounce back from key support • PSU Banking index is at the cusp of multi year breakout and seen relatively outperforming . We expect this relative outperformance to further amplify in coming months

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