IGI Logo

Nifty: 16341

Technical Outlook

* The index started the session with a gap down opening. However, buying demand from 50 days EMA that helped index to recoup intraday losses and settle near days high. As a result, daily price action formed a bull candle carrying higher high-low, indicating continuance of positive momentum

* The formation of higher high-low supported by across sector participation which makes us confident to reiterate our positive stance and expect the Nifty to gradually head towards 16600 in coming weeks as it is confluence of 50% retracement of CY22 decline (18350-15183) coincided with 200 days EMA around 16550. In the process, bouts of volatility can not be ruled out owing to volatile global cues. Thus buying on dips would be the prudent strategy as we believe key support for the Nifty is placed at 15700 being 50% retracement of current up move (15183-16287) placed around 15700. Our positive stance on the index is based on the following observations: a) the index has been sustaining above its 50 days EMA for the second consecutive session after mid-April, indicating revival in upward momentum b) the current pullback of 1170 points from June low of 15183 is strongest compared to late May pullback of 1060 points, highlighting inherent strength c) on the smaller degree chart, the index has witnessed faster retracement wherein it entirely retraced past four sessions decline (16275-15858) in just two sessions, highlighting improving structure that bodes well for extension of ongoing pullback

* The broader market indices relatively outperformed the benchmark amid ongoing earning season. Nifty midcap and small cap indices are enduring their higher high-low formation on the weekly chart over fourth consecutive week. The strength of current up move is further validated by improvement in breadth indicator compared with earlier pull backs since April, measured by percentage of stocks above 50 DMA (currently at 61% strongest in two months) indicating broad based participation. Thus, dips should be capitalised on to accumulate quality midcaps amid ongoing earning season

* In the coming session, index is likely to open gap up tracking firm global cues. We expect index to trade with a positive bias while maintaining higher high-low formation and likely to challenge our earmarked target of 16600 levels. Hence, after a positive opening use intraday dip towards 16440-16466 for creating long position for the target of 16555.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35720

Technical Outlook

* The daily price action formed a second consecutive strong bull candle with a higher high -low signaling positive bias . The index in the process completely retraced its last week shallow corrective decline signaling strength and continuation of the current pullback rally

* Going ahead, we reiterate our positive stance as we expect the index to maintain positive bias and head towards 36400 levels in the coming sessions being the confluence of the high of June 2022 and the 61 . 8 % retracement of the previous major decline (38765 -32290 ) placed at 36400 levels

* Key observation in the recent market correction and during the last three -week pullback is that the Bank Nifty is relatively outperforming the Nifty . It is also highlighted in the Bank Nifty/Nifty ratio chart as it is seen breaking above the falling supply line joining recent highs highlighting strength and continuation of the current outperformance

* The formation of higher high -low on the weekly chart makes us confident to revise the support base higher towards 34500 levels as it is the confluence of the last week low and the 50 % retracement of the recent up move (33080 -35761 )

* Among the oscillators, the weekly stochastic remain in strong up trend thus supports the overall positive bias in the index

In the coming session, index is likely to open gap up amid firm global cues . We expect the index to continue with its positive momentum while maintaining higher high -low . Hence after a positive opening use intraday dips towards 35830 -35900 for creating long position for the target of 36160 , maintain a stoploss at 35710

Nifty Bank Index – Weekly Candlestick Chart

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer