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Nifty: 17072

Technical Outlook

* The index started weekly expiry session with a positive gap (16955-17015) and oscillated in 100 points range. The daily price action formed a high wave candle carrying higher highlow, indicating continuance of positive bias

* The formation of higher high-low after 1200 points decline signifies pause in downward momentum. We expect the index to extend the ongoing pullback in tandem with global peers and gradually head towards 17200. In the process, stock specific action would prevail. Thus, any dip from here on should be capitalised to accumulate quality stocks in staggered manner. We believe, 17200 will be the key level to watch on the upside as it is confluence of:

* a) 61.8% retracement of last leg of decline (17640-16410), at 17170

* b) 100 days EMA is placed at 17150

* The Nifty midcap, small cap indices are forming a higher base above 100 days EMA. Key point to highlight is that the broader market indices are undergoing slower pace of retracement as over past nine weeks Nifty midcap, small cap indices have retraced 61.8% of preceding eight week’s rally. Slower pace of retracement signifies healthy retracement that would set the stage for next leg of up move

* We believe the ongoing corrective phase would find its feet around 16400 as it is confluence of:

* a) Monday’s panic low is placed at 16410

* b) 80% retracement of current pullback (16410-16971) is placed around 16500

In the coming session, the index is likely to open on a positive note tracking buoyant global cues. We expect index to endure its higher high-low formation. Hence use dip towards 17080-17108 for creating long position for target of 17197

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35191

Technical Outlook

* The daily price action formed a high wave candle with small real body and shadows in either direction signaling a pullback for the third consecutive session after recent sharp decline .

* Index need to start forming higher high -low in the daily chart on a sustained basis and close above Monday’s gap down area of 35500 for any meaningful technical pullback to materialize . Failure to do so will lead to a range bound trade in the broad range of 34000 -35500 as seen in the last three sessions

* Index after the recent sharp decline of 3500 points in six sessions has approached oversold territory and is placed around the price parity with the previous three major decline of around 20 % each in the last 20 months placed around 33500 levels .

* On the higher side immediate resistance is placed at 35500 levels being the confluence of the 200 days EMA (placed at 35440 ) and the upper band of the Monday’s gap down area

* Structurally, time wise index has maintained rhythm over past 20 months of not correcting for more than 9 weeks’ . In the current scenario we are already in the 9 weeks of correction . we expect ongoing corrective phase to mature in coming weeks as Index has approached oversold territory in the daily and weekly chart

* Among the oscillators the weekly stochastic is rebounding from the oversold territory placed at 25 levels thus supports the continuation of the last three sessions pullback in the coming sessions

* In the coming session, index is likely to open on a positive note amid firm global cues . We expect, the index to continue with its last three sessions pullback and test the Monday’s gap down area placed around 35500 levels . Hence after a positive opening use dips towards 35090 -35170 for creating long position for the target of 35430 , maintain a stoploss at 34990

Nifty Bank Index – Weekly Candlestick Chart

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