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Nifty: 15361

Technical Outlook

• The index started the session on a positive note. However, failed to sustain above 15850 and gradually pared initial gains. Further, selling pressure accelerate on the breach of immediate support of 15700, contrary to our expectations and settled the session below 15400 mark. As a result, daily price action formed a sizable bear candle carrying lower high-low, indicating acceleration of downward momentum.

• The formation of lower high-low on the daily and weekly chart underpinned by across sector sell-off signifies continuance of corrective bias that makes us revise support base in the 14800-14600 as it is confluence of:

• A) 80% retracement of CY-21 rally (13596-18604), at 14600

• B) implicated target of recent consolidation breakdown 16800-15700, is placed at 14600

• Going ahead, for revival of sentiment, index needs to form higher high-low on weekly timeframe along with improvement in market breadth. In the process, 15800 will act as key resistance on the up side.

• Structurally, the sentiment indicators are approaching their bearish extremes. Historically, such bearish extreme conditions posses distinctive nature of a technical pullback in subsequent weeks. The key observations on sentiment indicators are as follows (detailed charts shown in next slide)

• A) Historically, reading of percentage of stock above 200 DMA below 20 signifies oversold conditions and witness decent bounce in subsequent weeks. Therefore, current reading of 14 (which is lowest since March 2020) signifies impending pullback B) Empirically, net advance - decline below -450 signifies market sentiment at its bearish extreme, offers favourable entry points from medium term perspective.

• The formation of lower peak and trough on the broader market indices signifies corrective bias. To pause the ongoing corrective bias, the broader market indices need to decisively close above previous session high. Else prolonged correction wherein broader market would relatively underperform the benchmark

• In the coming session, index is likely to open on a flat note amid mixed Asian cues. We expect bias to remain corrective as long as index maintains lower high-low formation. Hence, use intraday pullback towards 15490-15525 for creating short position for the target of 15405

Nifty Bank: 32617

Technical Outlook

• The daily price action formed a sizable bear candle with a lower high -low signaling continuation of the corrective bias . The index started the session on a positive note but faced stiff resistance around the Monday’s gap down area (33750 -34346 ) and dragged lower as the session progressed . The index contrary to our expectations closed firmly below the support area of 33000 levels

• Daily stochastic has approached oversold territory with a reading of 7 , however it continues to remain in downtrend . Index need to start forming higher high -low in the daily chart on a sustained basis for any technical pullback to materialize in the coming sessions . Failure to do so will keep the bias down and will lead to extension of decline towards the 31000 levels

• Index has immediate hurdle around 33800 levels being the confluence of the lower band of the Monday’s gap down area (33774-34345) and the 38.2% retracement of the recent decline (36083 -32538 )

• The index has support around 30500 -31000 levels being the confluence of the following technical observations :

• (a) 80 % retracement of the previous major rally of December 2020 -October 2021 (28976 -41829 )

• (b) previous major low of April 2021 is also placed at 30405

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