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Nifty : 19306

Technical Outlook

• The index started the monthly expiry week on a flat note and gradually inched upward. As a result, daily price action formed a doji like candle, indicating rise in volatility amid positive bias wherein stock specific action prevailed.

• Going ahead, we expect Nifty to stage a technical bounce from oversold readings and eventually head towards upper band of consolidation placed at 19600, as it is confluence of 50% retracement of recent decline (19991-19229) coincided with last weeks high of 19584. Key point to highlight is that, past five week’s 4% decline hauled weekly stochastic oscillator in oversold territory (currently placed at 8), suggesting impending pullback as we expect Nifty to hold the key support of 18900. We therefore recommend to follow buy on dips approach. Our view is based on following observations:

• a) The index has undergone slower pace of retracement (Over past five weeks, it retraced 50% of preceding four weeks up move of 18647- 19991) while discounting host of concerns over sticky inflation and rising US Dollar Index, highlighting robust price structure

• b) Dollar Index inched up for sixth week and approached higher band (105) of declining channel which is in place since January 2023. We expect upsides to be capped at 105 and reversal in coming weeks.

• On the broader market front, the Nifty midcap, small cap indices continued with its relatively outperformance against the benchmark. Structurally, small cap index witnessed a faster retracement by retracing 15 months decline in just five months. Although, in the shortterm index may undergo breather after sharp rally, small cap space is expected to relatively outperform over next couple of quarters

• The slower pace of retracement has helped index to cool off the overbought condition wherein stock specific action prevailed. Thus, we believe extended correction from hereon would find its feet around key support of 18900 being confluence of:

• a) 80% retracement of current up move (18645-19991), at 18915

• b) as per change of polarity concept, earlier resistance of 18887 will now act as key support

• c) 100 days EMA is placed at 18906

Nifty Bank: 44495

Technical Outlook

• The price action for the day formed a bull candle with higher high -low indicating follow through strength to Fridays recovery and presence of buying demand in the vicinity of rising 100 -day ema (43900 ) . Index however needs to surpass last week’s highs at 45000 for more meaningful recovery

• Going forward, we expect index to extend consolidation in 43500 -45000 aid positive bias . A sustained close above 45000 would indicate further strength towards 45800 . Our view is backed by following key observations

• Index has a key support around 43500 as it is 38 . 2 % retracement of entire rally since March 2023 lows (38613-46369) coinciding with June swing low at 43345

• Price wise current decline from highs would equate the last decline before March bottom (3000 points) around 43500

• Time wise, since June 2022 index has not formed more than three to four consecutive bear candles . With four bear candles behind us we expect downward momentum to halt and index to attempt a bounce back

• 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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