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Nifty: 18118

Technical Outlook

• The index started the session with a positive gap (18118-18184). However, it failed to sustain at higher levels and consequently drifted downward as intraday dips were short lived. As a result, daily price action formed a bear candle carrying a higher high-low formation, indicating temporary breather amid stock specific action

• The index has been sustaining above the 20 day’s EMA over the past couple of session, which had been acting as a stiff resistance over the past five weeks, indicating a revival of upward momentum amid elevated volatility ahead of Union Budget coupled with ongoing earning season. We expect the index to resolve higher and gradually head towards 18500 in coming weeks as it is 61.8% retracement of December decline (18887-17774). In the process, extended correction would find its feet around key support of 17800. Thus, any dip from here on should not be construed as negative. Instead dips should be capitalised on as incremental buying opportunity. Our constructive stance is based on following observations:

• a) Dollar index extended decline below 102 and remains in strong downtrend. Historically, a weak dollar leads to higher foreign inflows and positive for Indian equities structurally

• b) India VIX dipped 5% and ended the week below 15 levels for a fourth week indicating low risk perception by market participants

• Structurally, the index has been undergoing slower pace of retracement over past seven weeks wherein its retraced 50% of preceding nine week’s rally (16748-18888), indicating inherent strength. The formation of higher high-low signifies buying demand at elevated support base at 17800 as it is confluence of: a) 50% retracement of October-December rally 16748-18887 is at 17565, b) December 2022 low is placed at 17800 c) 100 days EMA is at 17898

• On the broader market front, indices are undergoing shallow retracement wherein over past three weeks it retraced merely 38.2% of a single week up move seen during the fag end of December 2022. We believe, ongoing healthy consolidation would help Nifty midcap, small cap indices to form a higher base to ride the next leg of the up move

• In the coming session, index is likely to open on a flat note tracking muted global cues. We expect, index to hold psychological mark of 18000 and witness stock specific activity amid expiry induced volatility. Thus, intraday dip towards 18040-18072 should be used to create intraday long positions for target of 18158

Nifty Bank: 42733

Technical Outlook

• The daily price action formed a bear candle with a higher high and a lower low signalling profit booking at higher levels as the index opened higher but failed to sustain at higher levels and gave up its gains to close down by 0 . 2 %

• Going ahead we expect the index to maintain overall positive bias and head towards the upper band of the last five weeks range placed at 43600 levels in the coming weeks which also confluence with the 80 % retracement of the recent breather (44151 -41597 )

• The index has formed a strong base around the key support area of 41600 -41800 over past five weeks . Key point to highlight is that the ongoing consolidation has hauled weekly stochastic oscillator in neutral territory and helped the index to form a higher base

• Structurally, over past six weeks, the index has undergone shallow retracement of just 38 . 2 % of its preceding 10 weeks rally of October –December (37387 -44151 ) indicating inherent strength

• The Bank Nifty has key support at 41600 marks as it is the confluence of (a) 38 . 2 % retracement of the previous rally (37387 -44151 ) at 41567 (b) higher band of the major one - year consolidation breakout area is also placed at 41600 - 41800 range

• The weekly stochastic has generated a buy signal moving above its three periods average thus supports positive bias in the index in the coming sessions In the coming session, the index is likely to open on a flat to negative note amid weak global cues . We expect the index to consolidate amid stock specific action . Hence use intraday dips towards 42440 -42520 for creating long position for a target of 42770 , with a stop loss of 42330 .

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