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NSE (Nifty): 17874

Technical Outlook

* The index started weekly expiry session on a subdued note and drifted southward as the session progressed. However, supportive efforts from 61.8% retracement of recent pullback (17613-18112) helped index to recover some of the intraday losses. As a result, daily price action formed a bear candle with small lower shadow carrying lower high-low, highlighting extended correction

* The lack of faster retracement on either side signifies extended consolidation (18200-17700) amid stock specific action that would make market healthy. Key point to highlight is that, past four week’s corrective phase hauled weekly stochastic oscillators towards oversold territory (at 26) while sustaining above 50 days EMA, which has offered incremental buying opportunity on multiple occasions over past 18 months. Hence, ongoing corrective phase around 50 days EMA should not be construed as negative. Instead, dips should be capitalised on to accumulate quality stocks

* The broader market indices have formed a lower high-low after six sessions pullback, indicating temporary breather. We believe, index to extend the ongoing consolidation and form a strong base formation above 50 days EMA that has been held since June 2020, highlighting robust price structure. Hence, focus should be on accumulating quality midcaps to ride next leg of up move 

* Structurally, the formation of higher trough on the monthly chart signifies broader positive structure is intact that makes us believe ongoing breather would find its feet around key support threshold of 17500-17600 as it is confluence of: a) 50 days EMA is placed at 17650 b) October 2021 low is placed at 17452

In the coming session, the index is likely to open on a positive note tracking firm Asian cues. We expect index to prolong the ongoing consolidation amid stock specific action. Hence, use dip towards 17880-17912 for creating long position for target of 17996

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 38560

* The daily price action formed a bear candle with a lower high - low signaling continuation of the corrective consolidation for the fourth session in a row as it seen testing the recent panic low of 38400

* Key observation is that the index since April 2021 has not corrected for more than four consecutive sessions, with four sessions of decline already behind us, we expect the index to maintain the rhythm and witness a rebound in the next couple of sessions

* Going ahead index holding above the support area of 38400 on a closing basis will lead to continuation of the consolidation in the broad range of 38400 -40000 . Failure to do so will lead to an extended decline in the coming sessions

* We believe the current breather should not be seen as negative instead it should be capitalized to accumulate quality banking stocks for the next leg of up move . Buying on dips strategy has worked well on multiple occasions in the last 16 months . We expect the index to form a higher base around 50 days EMA (currently placed around 38380 )

* The short term support base for the index is placed at 38400 levels being the confluence of the following technical observations :

* 61 . 8 % retracement of the recent up move (36876 -41829 ) placed at 38620 levels

* the upper band of the recent seven months range breakout area * the rising 50 days EMA is also placed at 38380 levels 

* In the coming session, index is likely to open on a positive note amid firm global cues . We expect, the index to trade in a range while holding above recent panic low of 38400 . Hence after a positive opening use intraday dips towards 38540 -38610 for creating long position for the target of 38870 , maintain a stoploss of 38420

Nifty Bank Index – Daily Candlestick Chart

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