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Nifty: 18016

Technical Outlook

Day that was…

Equity benchmarks extended gains over a second consecutive session tracking mixed global cues. The Nifty ended Wednesday’s session at 18016, up 86 points or 0.5%. However, the market breadth remained slightly in favour of declines with A/D ratio of 1:1.3. Sectorally, IT, auto outshone while FMCG, pharma took a breather.

Technical Outlook

• The index recouped initial losses and eventually settled above the psychological mark of 18000. The daily price action formed a bull candle carrying a higher high-low, indicating continuance of upward momentum. In the process, the index closed above the Budget day high around 18000

• The index has logged a resolute breakout from 10 week’s falling channel, indicating conclusion of corrective bias that bodes well for resumption of primary up trend. We expect the index to resolve higher and gradually head towards 18300 in coming weeks as it is 61.8% retracement of entire correction since January 2023 (18887- 17353). Thus, any dip from here on should be capitalised on as an incremental buying opportunity. Our positive bias is further validated by following observations:

• a) in past four instances since Covid lows, corrective phases have matured after ~9% price wise decline and 10 weeks of time wise correction. In the current context, there was 8% correction from highs over 10 weeks. We expect the current consolidation to mature and the Nifty to resume its uptrend in the coming week. In each of previous instances, post correction the index gained at least 7% over next one month from lows

• b) global markets have been in good shape with all major indices trading above their 20-day average. UK index (FTSE) registered new five year high while Dax is just 5% away from highs

• c) India VIX is hovering around December-January lows signifying low risk perception of market participants

• Structurally, formation of higher low signifies elevated buying demand that makes us confident to revise support base at 17600 as it is confluence of: a) 61.8% retracement of past three weeks rally 17353-18034 b) 200 days EMA is placed at 17580

In the coming session, index is likely to open on a positive note tracking firm global cues. We expect, index to maintain its northbound journey while maintaining higher high-low. Thus, intraday dip towards 17980- 18012 should be used to create intraday long positions for target of 18097

Bank Nifty

Day that was :

The Bank Nifty gained for the second consecutive session and closed higher by 0 . 2 % . The up move was broad based as 8 out of the 12 index constituents closed in the green . The Bank Nifty closed the session at 41731 levels up by 82 points or 0 . 2 % on Wednesday

Technical Outlook

• The daily price action formed a high wave candle with a higher high -low signalling continuation of the consolidation with positive bias . The index started the session on a soft note and formed an intraday low of 41455 in the midsession . The index however recouped its decline in the last hour of trade and closed the session near the days high (41795 )

• Going ahead we expect the index to move above the budget session high (42015 ) and open upside towards 43200 levels in coming weeks being the 80 % retracement of the entire corrective decline (44151 -39419 )

• Key point to highlight is that the index pricewise has remained resilient in the current corrective decline . While timewise since CY20 (Covid lows) intermediate corrections have lasted for 9 -11 weeks in a row . In the current scenario the index has already witnessed nine weeks of corrective decline retracing 65 % of its preceding 10 weeks rally of October –December (37387 -44151 ) . The maturity of time wise correction and price wise resilience makes us believe the stage has been set to resolve out of upper band of ongoing consolidation (42000 -39500 )

• The index has strong support around 39400 -39700 levels being the confluence of : (a) 61 . 8 % retracement of the previous major rally (37387 -44151 ) at 39970 (b) the presence of long term 52 weeks EMA is also placed at 39400 (c) Price parity with the previous major decline of September 2022 (41840 -37387 ) as projected from the December 2022 all -time high of 44151 also signals support at 39500 levels

• The weekly stochastic is in up trend and is seen sustaining above its three periods average signalling positive bias In the coming session, the index is likely to open on a positive note amid firm global cues . We expect, the index to trade with positive bias while maintaining higher high -low . Hence use intraday dips towards 41670 -41750 for creating long position for the targ

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