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Strong support for the Nifty is placed at 16800…

Technical Outlook

• The index started the week with a negative gap (17172-17009) and traded volatile guided by global cues. However supportive efforts emerged from lower band of consolidation (16800) on couple of occasions which helped index to recoup intra-week losses. As a result, weekly price action formed an inside bar as Nifty oscillated within last week’s trading range of 17415-16825, indicating choppy consolidation amid stock specific action

• Nifty has undergone a strong base formation above lower band of consolidation coincided with 200 days EMA placed around 16800 despite global volatility. In the process, anxiety around US Fed meeting outcome is getting discounted. In the upcoming truncated week, strong support for the Nifty is placed at 16800. Thus, only a decisive close below 16800 post UF Fed meet outcome would lead to extended correction, else prolongation of consolidation in the 17500-16800 range. The ongoing consolidation has helped weekly stochastic oscillator to cool off the overbought conditions, thereby making market healthy. Thus, dips should be capitalised to accumulate quality stocks in a staggered manner. On the upside, 17500 will be the key level to watch as it is a confluence of: a) bearish gap recorded on April 18, 2022 placed in the range of (17475-17238) b) 50% retracement of April decline (18114-16825)

• Structurally, strong base at 16800 has been made as over past 17 sessions retraced only 50% of 19 session rally despite elevated global volatility which we do not expect to be breached in coming weeks as it is confluence of: A) 50% retracement of the entire March 2022 B) 200 days EMA placed at 16860

• Sectorally, we are positive on BFSI, Auto, Metals, PSU. IT offers favorable risk reward amid oversold conditions

• Our preferred large cap stocks are SBI, Bandhan bank, Asian Paints, Tata Motors, TCS, JSW Steel, Divi’s Labs while in midcaps we like Amber Enterprises, Apollo Tyres, Concor, Indian Hotels, Mahindra CIE, Gokaldas Exports, Persistent Systems, Phoenix Mills, NMDC

• The broader market indices are consolidating in the vicinity of 200 days EMA. We believe, base formation from hereon would set the stage for next leg of up move amid ongoing Q4FY22 earning season

In the coming session, index is likely to witness gap down tracking weak global cues. The breach of Friday’s low signifies extended correction. Hence, after a negative opening use pullback towards 16990-17025 for creating short position for the target of 16903

NSE Nifty Daily Candlestick Chart

Nifty Bank: 36088

Technical Outlook​​​​​​​

• The weekly price action formed a high wave candle with shadows in either direction signaling pause after last three week’s corrective decline

• In the coming truncated week, we expect the index to hold above the crucial support area of 35500 -35000 and gradually head towards 37300 levels in the coming weeks

• The index has already taken four weeks to retrace just 50 % of its preceding four weeks up move (32156 -38765 ) . A shallow retracement signals a positive price structure and a higher base formation

• On the higher side 37300 is likely to act as major hurdle being the confluence of the bearish gap area of 18th April & the 50 % retracement of recent decline (38765 -35511 )

• Structurally, the current corrective decline is shaping out as a retracement of strong 20 % rally from March 2022 lows (32156 ) which has helped the index to work off the overbought conditions in the weekly time frame . We expect the index to hold above the strong support area of 35500 -35000 levels as it is confluence of :

• (a) 61 . 8 % retracement of the entire March 2022 up move (32155 -38765 ) placed at 34800 levels

• (b) The rising 52 weeks EMA is also placed around 35500 levels

• (c ) The recent swing low of second half of March 2022 is also placed around 35000 levels

• Among the oscillators the weekly stochastic has cooled off from the overbought territory and is currently placed at a neutral reading of 42 signaling a pullback likely in the coming weeks In the coming session, index is likely to open gap down tracking weak global cues . We expect the index to trade with corrective bias . Hence after a gap down opening use intraday pullback towards 35870 -35930 for creating short position for the target of 35630 , maintain a stoploss at 36040

Nifty Bank Index – Weekly Candlestick Chart

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