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Nifty :18600

Technical Outlook

• The index recouped initial losses and reclaimed 18300 mark. The daily price action formed a bull candle carrying higher high-low, indicating continuance of positive bias. Meanwhile, Nifty small cap index extended its record setting spree

• Going ahead, we expect the Nifty to maintain its northbound journey and retest lifetime high of 18600 in the run up to Union Budget 2022. Key point to highlight is that the ongoing up move has been backed by improving market breadth as currently 76% of Nifty 500 constituents are trading above 50 days EMA compared to mid-December reading of 49%. Improving market breadth signifies inherent strength that augurs well for durability of ongoing up move. Therefore, any dip from here on would offer an incremental buying opportunity as we do not expect the Nifty to breach 17800 in coming weeks

• The broader market continued to outperform wherein Small cap index led the show. The Small cap index clocked fresh life time high after witnessing a faster pace of retracement as it entirely retraced past 10 weeks corrective phase in just three weeks, indicating structural improvement. Thereby we expect broader market to endure their relative outperformance in coming weeks.

• Structurally, the formation of higher peak and trough on the weekly and monthly chart signifies elevated buying demand, that makes us confident to revise support base in the range of 17800 as it is confluence of: a) 80% retracement of current up move (17655-18272), placed at 17778 b) current week’s low is placed at17879

In the coming session, the index is likely to open on a flat note amid positive Asian cues. We expect the index to trade with a positive bias while maintaining higher high-low formation. Hence use intraday dip towards 18252-18278 for creating long position for target of 18366

NSE Nifty Daily Candlestick Chart

Nifty Bank: 38370

Technical Outlook

• The price action on Monday resulted in an inverted hammer like candle with higher shadow indicating failure to sustain at higher levels . It however formed higher high - low as compared to Fridays session indicating supportive efforts emerging around 38000 mark

• Going forward, our structural positive stance on BankNifty remains intact with next target of 40000 expected in the run -up to the Union Budget 2022 , which is the 80 % retracement of the entire decline (41829 -34018 )

• Index has resumed its uptrend after 20 % correction during November -December 2021 . In early January 2022 index resolved out of falling channel signaling end of corrective phase . Further relative ratio of BankNifty/Nifty has also resolved above falling trend line indicating outperformance by Banking index in coming weeks, as anxiety around impact of third covid wave subsided . Therefore, any breather in coming week should not be construed negative rather would offer incremental buying opportunity as we enter the Q 3 earnings season . Buying the decline strategy should work well in coming earnings season as we expect BankNifty index to hold strong support of 37500 levels being the confluence of the following technical observations :

• (a) 23 . 6 % retracement of the current up move (34018 - 38851 )

• (b) the recent breakout area is placed around 37500 levels

• In the coming session, the index is likely to open on a flat note amid firm Asian cues . We expect the index to trade with positive bias while sustaining abov e Friday’s low of 38110 . Hence use intraday dips towards 38310 -38380 for creating long position for the target of 38625 , maintain a stoploss at 38195

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