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Nifty : 19597

Technical Outlook

• The index started on a positive note and gradually inched upward. As a result, daily price action formed a bull candle carrying higher high-low, indicating continuation of upward momentum.

• The prolongation of ongoing consolidation 19900-19200 amid stock specific action signifies healthy retracement. In a secular bull market, secondary correction make market healthy by cooling off overbought conditions. Thus, accumulating quality stocks on dips would be the prudent strategy to adopt at amid progression of ongoing earning season.

• The midcap index has been enduring its record setting spree over past eleven weeks in row despite profit booking in the benchmark, highlighting inherent 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 at higher levels can not be ruled out. Thus, focus on accumulating quality stocks in a staggered manner.

• On the global macro front, Brent crude oil and Dollar Index have seen technical pull backs in slower pace after past two months decline. We expect upsides to be capped at $87 and 103.5, respectively. As domestic equity market has an inverse relationship with the aforementioned macro factors, we believe resumption of downward momentum in crude oil and dollar index will fuel the rally in domestic equity market

• We believe, any extended breather from hereon would get anchored around key support of 19200 as it is confluence of:

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

• b) 50 days EMA is placed at 19174

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

Nifty Bank: 44837

Technical Outlook

• The price action for the day formed an inside day candle as index oscillated in mere 300 points range and remained enclosed within Friday’s high -low range (45118 -44520 ) . It indicates lack of follow through strength to Fridays recovery and non directional bias in the vicinity of 50 -day ema .

• Nifty Bank index is undergoing a corrective phase over past two weeks after strong 20 % rally from March lows . Index however attracted buying demand near its 50 -day ema of 44500

• Going forward we expect 45500 to act as immediate hurdle in coming week ahead of RBI policy and inflation numbers while only a decisive breach below 44500 may lead to panic reaction towards 43800 in the short term which will present buying opportunity

• Structurally ongoing corrective phase would make markets healthy from medium term perspective . Follow buy on dips strategy

• In the coming week inflation numbers and RBI policy outcome would set the tone for further directional bias

• In the coming session weekly expiry of finnifty may have bearing on some of the large banks

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