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Nifty

Technical Outlook

* The index started the session with a positive gap 16887-17147 and endured its upward momentum as intraday pullbacks were short lived. The daily price action formed bull candle carrying higher high-low, indicating abating downward momentum.

• Going ahead, sustainability above 17500 would lead to extension of next leg of up move towards 17800 in coming weeks as it is 80% retracement of September decline (18096- 16748) placed at 17826. On expected lines supportive efforts emerged from key support of 16700 amid oversold conditions. Thus any cool off from hereon towards 16900 due to global volatility should be used as incremental buying opportunity. Our view of technical pullback is further validated by following observations:

• A) Historically, September has been a volatile month. However, over past two decades, Q4 returns in a calendar year for Nifty has been positive (average 11% and minimum 5%) on 70% of the times. The history favours buying dips from hereon

• B) Indian equities continued to relatively outperform global peers while pricing in many negatives. While most global equity benchmarks have tested June lows, Nifty is 10% away from June lows

• Structurally, over the past five weeks’ index has retraced ~38.2% of preceding nine week’s rally (15185-18000) while absorbing global volatility, signifying healthy retracement amid relative outperformance against global peers. Currently, index staged a bounce from 200 days EMA highlighting key support in the vicinity of 16900 which we expect to hold in the near term, as it is confluence of:

• A) 200 days EMA is placed at 16888

• B) Current weeks low of 16855

• In the coming session, index is likely to witness gap up opening tracking strong pullback in global equities over past two sessions. We expect, index to trade with a positive bias while maintaining higher high-low formation amid weekly expiry volatility. Thus, cool off towards 17338-17372 should be used for creating long position for the target of 17456

Bank Nifty

Technical Outlook

* The index opened with a gap up action above Mondays high and continued to gain through the session resulting in a strong bull candle that resulted in a breakout above past five session range and follow up to last week’s Bullish Hammer reversal pattern

* We expect pullback to continue with immediate upside target of 39500 which is 50 % retracement of most recent decline from life highs (41840 -37386 ) . While a temporary breather around 39500 cannot be ruled out we expect index to eventually surpass 39500 levels and therefore recommend buying any temperory retracement

* Banking index has corrected 10 . 5 % from highs of 41840 rendering prices to oversold territory and witnessed buying demand at key support of 37300 -37500 .

* Key observation during last week is index corrected 10 . 5 % from life highs over 11 sessions (41840 -37386), equating current price/time decline with its May -June decline (36083 - 32290 ) and made a sharp pullback validating support zone around 37500 levels

* Structurally, the index has witnessed a faster retracement as eight month’s decline (41829 -32990 ) was completely retraced in just two and half months highlighting overall positive bias

* The index has support around 37900 levels as it is the confluence of the 100 days EMA (currently placed at 37640 ) coincided with current week’s low of 37963 In the coming session, index is likely to witness gap up opening tracking strong pullback in global equities over past two sessions . We expect, index to trade with a positive bias while maintaining higher high -low formation amid weekly expiry volatility . Thus, cool off towards 39370 -39430 should be used for creating long position for the target of 39720 , maintain a stop

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