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Nifty : 19435

Technical Outlook

• The weekly price action formed a bull candle after five week’s correction, indicating pause in downward momentum. Despite elevated global volatility, index has managed to hold 50 days EMA placed around 19200 on multiple occasions and staged a strong bounced in the fag end of the week, highlighting robust price structure

• Going ahead, we expect Nifty to challenge the upper band of consolidation placed at 19600 and eventually accelerate ongoing pullback. The past five weeks healthy retracement appears to be forming a falling wedge pattern. Thus, a decisive close above upper band of falling wedge would confirm conclusion of corrective bias.

• Past six week’s healthy retracement helped index to cool off the overbought conditions in large caps while broader market relatively outperformed. The constant supportive efforts from 19200 signifies buying demand at elevated support base. Therefore, we expect large caps to regain upward momentum in coming weeks. Consequently, buying on dips would continue to act as prudentstrategy. Our positive bias is based on following observations:

• a) past five weeks slower pace of retracement helped index to cool off overbought conditions as weekly stochastic bounced from extreme oversold conditions

• b) The global indices have seen revival in upward momentum post four weeks decline, indicating resumption of up trend

• c) Dollar Index taken a breather after approaching the upper band of declining channel placed at 105. The follow through weakness below last week’s low will confirm reversal in trend

• Defying the corrective trend of benchmark, the broader Nifty midcap and small cap indices clocked new All Time High signifying relative strength. We expect broader market to endure its relative outperformance with stock specific action. Meanwhile, possibility of temporary breather at higher levels can not be ruled out amid overbought conditions after five monthsrally

• The index showed relative strength by displaying supportive efforts from intermediate support of 19200 on multiple occasions. Thereby, we revise support base upward at 19200 being confluence of:

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

• b) Past two weeks identical low is placed at 19224

• c) 500 days EMA is placed at 19294

• Sectors like BFSI, PSU, pharma and discretionary to relatively outperform while IT, metal provides favourable risk-reward

• On stock front, in large cap we prefer Reliance Industries, Kotak Mahindra Bank, TCS, BEL, NTPC, Tata Steel, Havells, Maruti Suzuki, Sun Pharma while in midcaps Brigade Enterprises, PNB, Latent View, Sagar Cements, Century Textiles, Coromandel, Hudco, IRCON, Engineers India, KPR Mills looking good

Nifty Bank: 44436

Technical Outlook

• The price action for the week formed a high wave candle that remained enclosed within prior week’s trading range (45000 - 43800 ) indicating extended base formation near key support of 43500

• Going forward, we expect index to hold key support of 43500 and challenge upper band of consolidation at 45000 mark . Sustained close above 45000 would indicate end of corrective phase and extended gains in coming weeks . Our view is backed by following key observations

• Index is holding key support around 43500 over past three weeks as it is 38 . 2 % retracement of entire rally since March 2023 lows (38613 -46369 ) coinciding with June swing low at 43345 and 100 -day ema

• Past six weeks corrective phase has been shallow and led prices to oversold conditions . Shallow retracement indicate continuation of structural uptrend

• PSU Banking index has spend entire august in a consolidation . While large cap banks may consolidate, smaller PSU banks are seen outperforming going ahead

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