IGI Logo

Nifty : 19310

Technical Outlook

• The index started the week on a flat note and underwent rangebound activity wherein Nifty oscillated by 230 points. Consequently, weekly price action resulted into bear candle carrying lower high-low over fourth consecutive week, indicating extended breather

• Key point to highlight is that, the index is approaching maturity of its price and time wise correction amid ongoing consolidation of 19600- 18900 range. Historically, in a secular bull market intermediate corrections to the tune of 5-7% has always presented incremental buying opportunity to ride structural bull run. While, time wise, index has not corrected for more than four consecutive weeks, since June 2022. In current scenario, Nifty has already corrected 4% over past four weeks, thus couple of percentage decline can not be ruled outs. However, such correction should not be construed as negative instead dips should be utilized as buying opportunity as we believe strong support is placed at 18900 levels.

• Structurally, index is undergoing slower pace of retracement as over past four weeks index has retraced 50% of preceding four week’s rally of 18646-19991 that has made market healthy by cooling off overbought conditions (as weekly stochastic oscillator hauled to 20 levels). Thus, we believe extended correction from hereon would find its feet around key support of 18900 being confluence of:

• A)80% retracement of current up move (18645-19991), at 18915

• B)as per change of polarity concept, earlier resistance of 18887 will now act as key support

• C)100 days EMA is placed at 18857

• On the broader market front, over past two consecutive weeks Nifty midcap and small cap indices have formed a high wave candle, indicating dwindling upward momentum after five months remarkable >30% rally which hauled weekly stochastic oscillator in overbought territory that suggests impending breather amid stock specific action would make broader market healthy

• Sectorally, PSU, BFSI, Healthcare, Consumption to relatively outperform the benchmark

• On stock front, in large cap we prefer Reliance Industries, HCL Tech, Bank of Baroda, NTPC, Adani ports, Titan, Havells India while in midcap HUDCO, Karnataka Bank, Alembic Pharma, Gabriel, EIH, Engineers India, BEML, ICIL,JK Paper will remain in focus

Nifty Bank: 43851

Technical Outlook

• The price action for the week resulted in a bear candle with lower high -low sequence highlighting yet another week of profit booking . In the process index is now down about 5 % from recent life highs (46369 ) leading prices towards price/time wise maturity of correction and oversold readings on weekly stochastics (13 )

• In the coming week we expect Nifty Bank to trade in 43300 - 44600 range with relative outperformance from PSU pack . Only a sustained close above 44600 would indicate more meaningful reversal as it is confluence of prior week highs and confluence of multiple moving averages . Following are key observations

• 38 . 2 % retracement of entire rally since March 2023 lows (38613 -46369 ) is placed at 43400

• June swing low at 43345

• Price wise current decline from highs would equate the last decline before March bottom (3000 points)

• Time wise, since June 2022 index has not formed more than three to four consecutive bear candles . With four bear candles behind us we expect downward momentum to halt and index to attempt a bounce back

• PSU Banking index is at the cusp of multi year breakout and seen relatively outperforming . We expect this relative outperformance to further amplify in coming months

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