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NSE (Nifty): 14558

Technical Outlook

*The index started the session with a positive gap (14696-14855) but failed to sustain at higher levels. As a result, the daily price action formed a sizable bear candle carrying a lower high-low, indicating extended correction as selling pressure got accelerated on breach of the immediate support of 14700, contrary to our expectation and closed below 50 days EMA for the first time since September 2020

*We expect index to extend ongoing correction towards 14400 as intermediate pullbacks have been short lived, indicating corrective bias. Hence, for a meaningful pullback to materialise, the index needs to decisively close above previous session’s high (14875). Else there will be prolonging of correction (corrected ~950 points from life highs of 15432) of post Budget rally (13662-15432) amid stock specific action making market healthy from medium term perspective

*The broader market indices extended breather over a ninth consecutive session after recent outperformance. Price wise, the Nifty midcap and small cap indices have not corrected for more than 9-10%, since March 2020. Meanwhile, since June 2020, on multiple occasions elevated buying demand emerged from 50 days EMA coinciding with rising trend line. In the current scenario, both broader market indices have corrected 5- 6%, sustaining above respective 50 days EMA. Hence, we believe extension of breather over next couple of days cannot be ruled out, which will help the index to cool off the overbought condition of weekly stochastic oscillators

*Structurally, we believe index has immediate support at 14400 as it is confluence of:

*a) The 61.8% retracement of last rally (13662-15432), at 14338

*b) Positive gap seen on February 2 is placed in the range of (14469-14281)

In the coming session, breach of Thursday's low (14478) would lead to extended correction. Else there would be consolidation amid stock specific action. The short lived intraday pullbacks indicates corrective bias. Hence, use intraday pullback towards 14590-14620 to create short position for target of 14504.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 33856

Technical Outlook

*The daily price action formed a bear candle which maintained lower high -low as contrary to our expectation the index closed below the support area of 34000 signalling extension of the current corrective decline

*Going ahead, the index is likely to extend the current corrective decline towards 33300 levels . Only a formation of higher high -low in the daily chart on a sustained basis will lead to a pause in the current corrective trend.

*On the higher side the index will face immediate hurdle at 35100 levels as it is the 50 % retracement of the last five sessions decline (36497 -33597 )

*The immediate support for the index is currently placed at 33300 levels being the confluence of the following technical observations :

a) The 61 . 8 % retracement of the budget rally (30906 -37708 ) is placed at 33400 levels

b) The lower band of the rising gap area of 2 nd February 2021 is also placed around 33300 levels

*The overall structure in the index remain positive as it has already taken 22 sessions to retrace just 50 % of preceding 13 sessions sharp up move (29688 -37708), at 33700 . The slower pace of retracement signifies healthy retracement and a higher base formation

*In the coming session, the index is likely to open on a negative note on the back of weak global cues . A follow through weakness below Thursday's low (33668 ) would lead to extended correction . Else consolidation amid stock specific action . Index forming lower high -low highlighting corrective bias . Hence, use after a negative opening use intraday pullback towards 33850 -33910 to create short position for target of 33640 , maintain a stoploss at 34010

The daily stochastic after the last five sessions decline has approached the oversold territory with a reading of 11 . Hence, supportive effort is likely at lower levels

Nifty Bank Index – Daily Candlestick Chart

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