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Nifty

Technical Outlook

• The index witnessed a choppy session as the Nifty oscillated in a 120 points range. As a result, the index formed a small bull candle confined within Tuesday’s trading range (17625-17345), indicating stock specific action amid positive bias. In the process, broader markets outperformed the benchmark as the Nifty midcap, small cap gained over 0.7% each

• Going ahead, we expect the index to prolong the ongoing consolidation in the broader range of 18000-17400 wherein stock specific action would prevail. Subsequently, this healthy retracement will help the index to cool off overbought conditions (weekly stochastic cooled off to 88 from the previous week’s reading of 97). Hence, extended breather from here on should be capitalised on to accumulate quality stocks. Our structural positive stance is validated by following observations:

• a) Nifty has registered a bullish golden crossover (50-day EMA crossing 200-day EMA) at 17660 indicating, structural bullish development from medium term perspective. Since 2009, in eight out of 10 such instances, the Nifty has generated average 11% return in subsequent three to four months

• b) percentage of stocks (Nifty 500) rising above their long term 200- day moving average has seen sequential improvement. From June low reading of 14%, the current reading has jumped to 48% indicating broad based nature of the rally

• The Nifty midcap index staged a bounce back after retesting breakout area of falling channel encompassing past eight month corrective phase thereby confirming resumption of up trend. Meanwhile Nifty small cap index is hovering in the vicinity of the breakout zone of entire corrective phase falling trend line that augurs well for next leg of up move

• Structurally, prolongation of rallies underpinned by improving market breadth makes us confident to retain support base at 17200 as it is 38.2% retracement of July-August rally (15858-17992)

• In the coming session, 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 monthly derivative expiry. Hence, use intraday dip towards 17590-17622 for creating long position for the target of 17709

Nifty Bank

Technical Outlook

• The daily price action formed a bull candle with a higher high -low signaling continuation of the positive momentum as elevated buying demand emerged from the 20 days EMA on Tuesday session currently placed at 38130 levels

• Going ahead we expect the index to consolidate with positive bias in the broad range of 37500 -39500 after a strong rally of 15 % in the last five weeks . Consequently, this will help the index to cool off overbought conditions (currently weekly stochastic cooled off to 89 from 95 levels seen during last week )

• We believe the current consolidation should not be seen as negative instead would make the market healthy and provides incremental buying opportunity in quality banking stocks from medium term prospective

• Bank Nifty continue to relatively outperformed the benchmark index in the last few quarters as can be seen in the Bank Nifty/Nifty ratio chart . Within the banking stocks PSU banking stocks has been resilient and showing relative strength which we expect to outperform going forward

• The index has immediate support around 37500 levels as it is the confluence of the 28th July 2022 and the 50 % retracement of the last five weeks up move (34464 -39759 ) 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 two sessions pullback amid monthly expiry led volatility . Hence after a positive opening use intraday dips towards 39020 -39100 for creating long position for the target of 39340 , maintain a stoploss at 38910

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