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Nifty

Technical Outlook

• The Nifty started the week with a gap down action on Monday following weak global cues although buying support prevailed yet again after a gap down around 17000 mark helping the index to recover over 200 points from lows (17064). Daily price action formed a Bull candle indicating buying demand at lower levels despite global volatility

• Going ahead, we expect the index to consolidate in the broader range of 17500-16700 amid stock specific action for a few sessions. The Nifty has rallied 680 points over last week leading short-term oscillator in overbought territory, indicating a couple of days breather ahead of US inflation data cannot be ruled out. However, such a breather should not be construed as negative. Instead, any dip from here on should be used as a buying opportunity amid onset of earning season, to ride the next leg of up move towards 17500. Sustainability above 17500 would lead to acceleration of upward momentum. Our positive view is further validated by following observations:

• a) historically, September has been a volatile month. However, over the past two decades, Q4 returns for the Nifty have been positive (average 11% and minimum 5%) 70% of the times. History favours buying on dips from here on

• b) Indian equities continued to relatively outperform global peers while pricing in many negatives in the process. We expect outperformance to continue

• Structurally, the index has undergone slower pace of retracement as over the past seven weeks’ it retraced ~38.2% of earlier nine week’s rally (15185-18000) while absorbing global volatility, signifying healthy retracement amid relative outperformance against global peers. Going ahead, we expect the index to hold the key support of 16900 in the near term as it is confluence of: a) 200 days EMA is placed at 16896, b) 38.2% retracement of June-August rally (15185-18000), at 16922, c) Last week’s low of 16855

• Broader market indices have shown follow through to last week’s bullish hammer and relatively outperformed last week. We expect the Nifty midcap and small cap indices to hold their September lows and stage a pullback in coming weeks on set of earning season

• In the coming session, the index is likely to open on a subdued note tracking muted global cues. Post initial decline, we expect the Nifty to hold 100 day’s EMA at 17090. Hence, use intraday dip towards 17130- 17162 for creating long position for the target of 17248

Bank Nifty

Technical Outlook

• The index started the session with a gap down action, only to recover the entire losses towards the end and settled above 39000 mark . In the process, price action formed a Bull candle with a higher high signifying strength and presence of elevated buying demand

• Going forward, we expect Bank Nifty to consolidate in 38000 -40100 range in coming few sessions as after 2000 points rally in just four sessions prices have reached overbought range and few days consolidation cannot be ruled out . However, dips should not be construed structurally negative rather a buying opportunity ahead of onset of earnings season

• Structurally, the index has already posted faster retracement on higher degree as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting end of major corrective phase and structural improvement . Hence ongoing retracement of June - September rally should not be construed negative rather would make overall trend healthier

• The Bank Nifty has key immediate support at 38000 mark being the last week’s low that also coincides with rising 100 day EMA

• Amongst momentum oscillators, weekly stochastics has eased from overbought readings to current reading of 39 making risk -reward favourable In the coming session, index is likely to open on a flat to negative note amid weak global cues . We expect the index to trade in a range with positive bias . Hence use intraday dips towards 38970 -39050 for creating long position for the target of 39330 with a stoploss at 38860

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