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Nifty: 18688

Technical Outlook

• The index pared initial gains and ended the session at day’s low weighed down by banking heavy weights. The daily price action formed a bearish engulfing candle encompassing last session’s bull candle, indicating breather after recent up move

• The lack of faster retracement on either side makes us believe index will undergo a healthy consolidation and pave the way to gradually head towards its lifetime highs of 18887 in June 2023. In the process, we expect broader market to outperform as Nifty midcap index endured its record setting spree. Thus, buy on dips strategy would continue to remain prudent strategy as Nifty has not corrected for more than 400 points while sustaining above its 20 days EMA since March

• The current up move is backed by the significant improvement in the market breadth as currently 70% of the stocks of the Nifty 500 universe are trading above their 200 days EMA compared to May end reading of 62%. The gradual improvement in the market breadth signifies inherent strength that bodes well for continuation of current up move

• Structurally, formation of higher high-low on the weekly and monthly chart signifies elevated buying demand that makes us confident to retain support base at 18400 as it is 50% retracement of current up move (18060-18778) coincided with 20 days EMA placed at 18530. In the coming session, the index is likely to open on a positive note tracking firm global cues. We expect, index to consolidate amid positive bias wherein stock specific action would prevail. Hence, use intraday dip in June future towards 18735-18765 to create intraday long positions for target of 18852 with a stoploss of 18698.

Nifty Bank: 43444

Technical Outlook

• The index started the session on a subdued note and gradually inched southward as the day progressed . As a result, daily price action formed a sizable bear candle carrying lower high -low, indicating pause in upward momentum as index breached below 20 day ema which has been held since 43856

• Key point to highlight is that, the index has approached the lower band of past five weeks consolidation placed at 43400 . Thus, 43400 would be the key monitorable as a decisive close below that would lead to extended correction . Else, prolongation of ongoing consolidation in 44500 -43400 range which will help index to cool off the overbought conditions formed due to past 11 week rally measuring 15 %

• Structurally, Bank Nifty has witnessed a faster retracement of the 14 weeks decline (44151 -38613 ) during Dec22 - Mar23 in just seven weeks . Faster retracement in just half the time interval indicates structural improvement from medium term perspective . However after such sharp rally consolidation near life highs would make larger trend healthier

• The index has immediate support at 43400 levels being the confluence of the last two weeks identical lows and the 50 % retracement of the recent up move (42582 -44151 )

• For the coming session, index is likely to open on a positive note tracking firm global cues . We expect, supportive efforts to emerge from lower band of ongoing consolidation 44500 -43400 . Hence, use intraday dip in June future towards 43530 -43590 to create intraday long positions for target of 43840 with a stoploss of 43424

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