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Nifty : 17054

Technical Outlook

* The index trimmed initial losses as strong pulled back from oversold territory helped Nifty to surpass 17100 mark. Subsequently, the index failed to sustain at higher levels, leading Nifty settled marginally positive. The daily price action formed a small bear candle with shadows on either side, highlighting elevated volatility amid stock specific action

* Going ahead, we believe ongoing corrective phase to find its feet around 16900-16700 zone and consequently undergo a base formation. However, to stage a meaningful pullback the index needs to decisively close above previous sessions high (17160). Else continuance of lacklustre move amid stock specific action. Thus, dips should be capitalised on to accumulate quality stocks as we do not expect it to breach key support threshold of 16900- 16700 based on following observations seen over past 20 months:

* a) Since May 2020, in all three corrections index retraced 38% of preceding rally. 38% retracement of current rally is placed at 16900

* b) since May 2020, index has not corrected for more than 10%. In current scenario, 10% correction from life high of 18600 will mature at 16740

* Meanwhile, 17600 would continue to act as immediate hurdle being 50 days EMA.

* The Nifty midcap and small cap indices formed a hammer like candle at 100 days EMA which has been held since June 2020, highlighting supportive efforts at key support zone. We believe, both indices will resume their bull trend post a decent higher base formation above 100 days EMA. Therefore, ongoing correction should be used as an incremental buying opportunity to ride structural uptrend.

In the coming session, the index is likely to open on a flat note tracking mixed tracking mixed Asian cues. We expect volatility to remain high around key support of 16900 amid oversold placement of weekly stochastic oscillator (placed at 12). Hence, use dip towards 16920-16952 for creating long position for target of 17033

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35976

Technical Outlook

* The daily price action formed a small bear candle with a long lower shadow signaling supportive effort at lower levels around the 200 days EMA (placed at 35307 ) . Index need to form higher high -low on a sustained basis in the daily chart for reversal of the current corrective phase 

* We expect the index to hold above the support area of 200 days EMA (placed at 35300 ) and enter into a base formation in the broad range of 35300 -37100 in the coming sessions

* Key observation is that the index since April 2020 has not corrected for more than one month barring one instance . In the current scenario with one month of decline already behind us, we expect the index to maintain the rhythm and form a higher base in the coming weeks

* On the higher side Friday’s gap down area of 37100 is likely to act as immediate hurdle for the index

* Nifty Bank has immediate support at 35300 levels being the confluence of the 200 days EMA and the 80 % retracement of the August -October 2021 rally (34115 -41829 )

* Among the oscillators the daily and weekly stochastic has approached an oversold territory with a reading of 21 and 8 respectively indicating an impending pullback

* In the coming session, index is likely to open on a flat note amid mixed Asian cues . Volatility likely to remain high on account of the volatile global cues . We expect the index to continue forming a base around the 200 days EMA . Hence use intraday dips towards 35590 -35670 for creating long position for the target of 35930 , maintain a stoploss of 35480.

Nifty Bank Index – Daily Candlestick Chart

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