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Supportive efforts to emerge at 17400…

Technical Outlook

• The index underwent profit booking after past four weeks rally that hauled daily stochastic oscillator in oversold territory (currently placed at 16). Key point to highlight is that, the fag end buying demand in Friday’s session resulted daily price action to form a doji candle carrying small bodied bull candle with shadows on either side, indicating supportive efforts emerged in the vicinity of key support zone of 17400

• Going ahead, we do not expect Nifty to breach the key support threshold of 17400 levels followed by meaningful bounce towards psychological mark of 18000 levels. In the process, stock specific action would prevail ahead of key global event of Fed meet coincided with monthly derivative expiry and ongoing earnings season

• Over past 22 months we have observed that, post 10-12% correction the subsequent major rallying segment have seen intermediate retracement to the tune of 38.2%-50% of respective rally while sustaining above 100 days EMA. Hence in current scenario, we expect index to maintain the same rhythm and buying demand to emerge around 17400 as it is confluence of 50% retracement of past one-month rally (16410-18350) coincided with 100 days EMA. Therefore, focus should be on accumulating quality stocks to ride next leg of up move • We expect themes like PSU, Auto, BFSI, Metal, Infra & Realty, unlock beneficiaries to remain in focus while pull backs in FMCG and Pharma to be short lived

• In large caps we like Reliance, SBI, Bajaj Finance, Tata Motors, Hindalco, Larsen & Toubro, United Spirits, DLF while in Midcaps we prefer Trent, Apollo Hospital, KNR Construction, Tata Power, Brigade Enterprise, Canara Bank, Suprajit Engineering, Bharat Electronics, Indian Hotels

• In tandem with benchmark the broader market indices underwent profit booking. We believe, ongoing breather would make broader market healthy and gradually help them to relatively outperform in coming weeks

• Structurally, the formation of higher peak and trough on the monthly chart signifies broader positive structure is intact. The secondary correction is part of the secular bull market that paves the way for next leg of rally. In current scenario, we expect ongoing corrective move to find its feet around 17400 as it is confluence of:

• a) 50% retracement of December-January rally (16410-18350)

• b) The 100 days EMA is placed at 17362

• In the coming session, the index is likely to open on a negative note tracking weak global cues. However, we expect Nifty to hold key support threshold of 17400 and stage a pullback. Hence use intraday dip towards 17438-17470 for creating long position for target of 17559

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37574

Technical Outlook

• The weekly price action formed a bear candle with shadows on either side indicating profit booking around 38850 levels as past three week’s 14 % gains pushed the prices in overbought trajectory on daily chart (stochastics value above 90 at beginning of the week )

• Going forward, over all price structure continues to remain positive and last week’s profit booking should not be construed negative rather be viewed as healthy retracement of preceding three week 14 % rally . (34018 -38851 ) . Banking index relatively outperformed Nifty last week and the breakout of relative performance ratio of Bank Nifty/Nifty has already given a breakout from falling trend line indicating relative outperformance of the sector going ahead

• We do not expect Bank nifty to breach key support zone of 37000 -37200 and meaningful bounce back to materialize towards past two week’s highs of 38850 . Therefore one should use current decline to accumulate quality large and midcap banking stocks ahead of earnings season and key Fed meeting in upcoming truncated week

• In current context strong support exist around 37000 -37200 which is confluence of a) 38 . 2 % retracement of preceding four week rally (34018 -38851 ) and b) presence of 50 -day EMA which has acted as key support for Bank nifty during major rallies over past 22 months

• In the coming session, the index is likely to open on a negative note tracking weak global cues . However, post initial decline we expect BankNifty to hold key support threshold of 37200 -37000 and pose a decent pullback . Hence use intraday dip towards 37140 -37210 for creating long

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