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Nifty : 19387

Technical Outlook

• The index started weekly expiry session with a positive gap, however profit booking from higher levels dragged index near last session’s low. Consequently, the daily price action resulted into a bear candle, indicating prolonged consolidation above 100 days EMA

• Going ahead, sustenance above 19200 post outcome of Jackson Hole summit would open the door for extended pullback towards 19800 mark. Failure to do so would lead to prolongation of consolidation in 19500—18900 range amid stock specific action.

• The broader market have endured with its relative outperformance as Nifty midcap index recorded a fresh All time high while small cap index clocked fresh All time high since Jan-22. However, highlighting point is that, past five months remarkable >34% rally hauled weekly stochastic oscillator in overbought territory that suggests impending breather amid stock specific action that would make broader market healthy

• Key point to highlight is that, the benchmark is approaching maturity of its price and time wise correction. 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, any dip should not be construed as negative instead utilise it 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 below 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 18890

Nifty Bank: 44496

Technical Outlook

• The price action for the day formed a bear candle with higher shadow as index failed to sustain early gains and closed flat . It however formed higher high -low maintaining positive bias as index is seen attempting recovery from 100 -day ema after four week decline led prices into oversold readings on weekly stochastics (13 )

• Going forward, index holding 43500 post Fed meeting would indicate further technical pull back towards 45300 which is 61 . 8 % retracement of preceding four week decline (46369 -43600 ) . Only a sustained close below 43500 would indicate further weakness . Our view is backed by following 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

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