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Nifty: 17221

Technical Outlook

* The index witnessed a choppy consolidation as it oscillated in 150 points range throughout the session. As a result, the daily price action formed a small bear candle carrying lower high-low, indicating extended breather. In the process, over past three sessions Nifty retraced 61.8% of past four session’s up move (16892-17640)

* We believe, the Nifty has undergone a strong base formation around 16800-17000 zone after completing price-wise correction of 10% from life highs of 18600. Currently, index is approaching maturity of time-wise correction as we approach the 9 th week of correction, that makes us believe, index would gradually resolve out of upper band of consolidation placed at 17500 and eventually head towards psychological mark of 18000 in coming weeks. Therefore, any dip from here on should be capitalised as incremental buying opportunity to accumulate quality stocks. Our projection of target of 18000 is confluence of: a) 61.8% retracement of entire decline since October high (18600-16782) is placed at 16900 b) Implicated target of past two weeks consolidation (17500-16900) is placed around 18000

* Our constructive thesis is based on following observation:

* a) price wise index has maintained the rhythm of not correcting for more than 11% since May 2020. Time wise, the index has arrested secondary correction within nine weeks. In the current scenario, with eight week’s correction along with 10% correction behind us we believe the index would eventually witness a breakout from past two week’s consolidation

* b) Current rally from last week’s low (16782-17543=761 points is now bigger than early November pullback (17613-18210=597 points) supported by across sector participation, indicating structural improvement

* We expect, broader market indices to extend their relative outperformance as they have resolved out of strong base formation near 50-dema with improvement in market breadth, highlighting rejuvenation of upward momentum

In the coming session, the index is likely to open on a positive note tracking firm global cues. We expect, index to trade with a positive bias amid elevated volatility owing to weekly expiry. Hence, use dip towards 17295-17320 for creating long position for target of 17409

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 36789

Technical Outlook

* The daily price action formed a small bear candle which mostly remained contained inside Tuesday price range signaling continuation of the consolidation for the fifth consecutive session after last two weeks up move of 2000 points . Volatility is likely to remain high ahead of the FOMC meeting outcome on Thursday .

* Going ahead, we expect the index to sustain above the lower band of the last five sessions consolidation placed around 36000 -36500 levels and eventual resolve above Monday’s high (37581 ) and head higher towards 38500 levels in the coming weeks being the confluence of the previous breakdown area and 50 % retracement of the entire decline (41829 -35328 ) . Hence any dip in ongoing week should not be construed negative rather an incremental buying opportunity to accumulate quality stocks

* The index has seen a rebound during previous week after 6 weeks of corrective decline thus maintained the rhythm of rebounding after 6 - 8 weeks of corrective phase as seen since April 2020 signaling continuation of the overall positive structure

* Nifty Bank has immediate support at 35300 levels being the confluence of the following technical observations :

* (a) 200 days EMA placed at 35380 levels

* (b) The 80% retracement of the August -October 2021 rally (34115 -41829 ) is also placed at 35300 levels

* Among the oscillators the daily stochastic has cooled off from the overbought territory and is currently placed at the neutral reading of 40 signaling continuation of the current consolidation 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 trade with positive bias while maintaining higher high -low . Hence after a positive opening use intraday dips towards 37020 -37090 for creating long position for the target of 37340 , maintain a stoploss at 36890

Nifty Bank Index – Daily Candlestick Chart

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