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Nifty: 16215

Equity benchmarks concluded Monday’s session marginally lower as index pared initial gains tracking muted global cues. The Nifty ended the week at 16215, down 0.5%. Market breadth turned negative with A/D ratio of 1:1.6. Sectorally, auto, IT, consumer durables remained at forefront while metal underperformed the benchmark.

Technical Outlook

* The index started the week on a positive note and approached intermediate hurdle of 16400. However, profit booking in the second half dragged index lower. As a result, daily price action formed a bear candle carrying higher high-low, indicating breather after Friday’s sharp up move

* Going forward, healthy retracement of Friday’s sharp up move would pave the way to surpass the immediate hurdle of 16400 levels and eventually head towards 16800 in coming weeks. However, move towards 16800 would be in a nonlinear fashion as bouts of volatility owing to global volatile scenario would prevail. Hence, temporary breather towards 15800-16000 should be capitalized to accumulate quality stocks in a staggered manner as we do not expect the Nifty to breach the key support threshold of 15600. Our target of 16800 is based on following observations:

* a) 200 day’s EMA placed at 16780

* b) 50% retracement of the entire April-May decline (18115-15735)

* Structurally, over past two decades, on 16 out of 20 occasions despite transitory breach (not greater than 5%) of 52-week EMA (currently 16600) index has generated decent returns in subsequent 3 month and 6 months. In current scenario 5% from 52 weeks EMA is placed at 15700 which has been held on multiple occasions over past two weeks. We expect this rhythm to be maintained as strong support is placed in the range of 15600-15400 as it is confluence of: 

*a) 61.8% retracement of CY21 rally

* b) equality of previous down leg of 14% projected from April high of 18115

* On the broader market front, we expect Nifty midcap, small cap indices to consolidate amid oversold conditions and form a higher base wherein stock specific action would prevail

* In the coming session, index is likely to open on a positive note tracking firm global cues. We expect index to trade with a positive bias while sustaining above 16100. Hence, use intraday dip towards 16140-16172 for creating long position for the target of 16263

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34247

The Bank Nifty traded with high volatility and closed marginally lower on Monday amid mixed Asian cues . Index started the session on a positive note and tested the last two weeks highs around 34800 in the midsession . However, profit booking in the second half of trade saw the index gave up entire intraday gains to close the session at 34247 levels down marginally by 28 points or 0 . 1 % on Monday .

Technical Outlook

* The daily price action formed a small bear candle with a long upper shadow signaling profit boking at higher levels near last two weeks high (34800 ) .

* Going ahead, we expect index to consolidate and form a base in the broad range of 34800 -33300 levels . Buying on dips towards 33300 -33500 levels should be rewarding as strong support exist around 32000 -32500 levels .

* On the higher side a firm closing above 34800 will lead to a gradual up move towards 36000 levels in a nonlinear fashion being the confluence of the 200 days EMA (placed at 35948 ) and the 50 % retracement of the entire recent decline (38765 -33002 ) .

* The index has key support placed around 32000 -32500 levels as it is :

* (a) March low placed at 32155

* (b) The value of the rising trendline joining lows of April 2021 (30405 ) and March 2022 (32155 )

* Among the oscillators the weekly stochastic is seen rebounding from the oversold territory and is currently placed at a reading of 17 signaling an impending pullback in the coming weeks In the coming session, index is likely to open on a flat note amid mixed Asian cues . We expect it to trade in a range while holding above 33900 levels . Hence, use intraday dips towards 33890 -33960 for creating long positions for target of 34210 , maintain a stoploss at 33770

Nifty Bank Index – Weekly Candlestick Chart

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