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Nifty: 17938

Technical Outlook

• The index started the session on a subdued note and traded southward throughout the day as intraday pullbacks remained short lived. As a result, the Nifty settled below psychological mark of 18000. The daily price action formed a bear candle carrying lower high-low, indicating extended breather after ~1000 points rally seen during CY22

• We expect the index to extend the ongoing breather amid stock specific action that would help stochastic oscillator to cool off the overbought condition and make market healthy. In a secular bull market secondary correction is a common phenomenon that offers fresh entry opportunity from medium term perspective. In the current scenario, we expect buying demand to emerge around key support threshold of 17800. Hence, extended breather from here on should not be construed as negative. Instead, dips should be capitalised on as an incremental buying opportunity to ride the next leg of up move towards 18600 in coming weeks

• The broader market indices relatively outperformed the benchmark and settled on a flat note. We believe, ongoing breather would make broader market healthy and gradually help them to accelerate relative outperformance in coming weeks

• Structurally, the formation of higher peak and trough on the weekly and monthly chart signifies elevated buying demand, that makes us confident that ongoing breather would find its feet around 17800 as it is confluence of: a) 61.8% retracement of CY22 up move (17383-18350), placed at 17752 b) Since May 2020 on multiple occasions 20 days EMA acted as an intermediate support during primary up trend. Currently it is placed at 17820 c) Last week’s low is placed at17879 In the coming session, the index is likely to open on a subdued note tracking mixed global cues. In the current up move off December low of 16410 Nifty has not corrected for more than 2 sessions in a row. In current scenario, as index has already corrected over past two sessions. We expect supportive efforts to emerge around 17800 mark in coming sessions. Hence use intraday dip towards 17878-17910 for creating long position for target of 17996

NSE Nifty Daily Candlestick Chart

Nifty Bank: 38041

Technical Outlook

• The price resulted in a bear candle with lower high -low indicating extended profit booking as index breached 38000 mark on intra day basis after reacting twice from 38850 which is last week’s high and also 61 . 8 % Fibonacci retracement of November -December decline (41829 -34018 ) . Price action over past one week reflect a breather after almost 4000 points rally since beginning of CY22 .

• Going forward, our structural positive stance on BankNifty remains intact with next target of 40000 expected in the run - up to the Union Budget 2022 , which is the 80 % retracement of the entire decline (41829 -34018 )

• Index has resumed its uptrend after 20 % correction during November -December 2021 . In early January 2022 index resolved out of falling channel signaling end of corrective phase . Further relative ratio of BankNifty/Nifty has also resolved above falling trend line indicating outperformance by Banking index in coming weeks, as anxiety around impact of third covid wave subsided . Therefore, any breather in coming week should not be construed negative rather would offer incremental buying opportunity as we enter the Q 3 earnings season . Buying the decline strategy should work well in coming earnings season as we expect BankNifty index to hold strong support of 37500 levels being the confluence of the following technical observations :

• (a) 23 . 6 % retracement of the current up move (34018 -38851 )

• (b) the recent breakout area is placed around 37500 levels

• In the coming session, the index is likely to open on a subdued note tracking mixed global cues . We expect volatility to remain higher owing to weekly expiry . Hence use intraday dip towards 37790 -37855 for creating long position for target of 38098 , maintain a stoploss at 37694

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