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Nifty: 15850

Technical Outlook

* The index witnessed a gap down opening (15832-15757) tracking muted global cues. However, supportive efforts from lower band of Monday’s positive gap (placed at 15700) helped index to recover intraday losses. The daily price action formed a significant bull candle carrying lower high-low, indicating supportive efforts at lower levels

* The index is sustaining well above the breakout area of falling channel placed at 15800 over past two sessions. We reiterate our stance of gradual extension of ongoing pullback towards 16200 levels in coming weeks wherein immediate support is placed at 15200. However, we believe the move towards 16200 would be in a zig-zag manner as bouts of volatility owing to monthly expiry and global developments can not be ruled out. Thus, any dip towards 15400 should be used as buying opportunity to ride next leg of up move towards 16200 as it is confluence of: a) 61.8% retracement of June decline (16794-15183) B) upper band of negative gap recorded on June 13 (16201-15878).

* The sentiment indicators have bounced back from extreme oversold reading of 12. Historically, the reading of percentage of stocks above 200 DMA below 15 signifies extreme pessimism in the markets that eventually leads to a technical pullback to the tune of minimum 10% in subsequent three months. In current scenario, we expect the index to maintain the same rhythm in coming months

* The broader market indices have bounced after forming hammer like candle on the weekly chart. In three instances over the past decade, intermediate correction in the Nifty Midcap, Small cap indices have been to the tune of 28% and 40%, respectively. At present, both indices have bounced after correcting 25% and 34%, respectively. Therefore, base formation from here on would set the stage for a technical pullback in coming weeks

* In the coming session, index is likely to witness gap down opening tracking weak global cues. The formation of lower highlow signifies retracement of last week’s pullback. We expect volatility to remain high owing to monthly expiry and global volatility. Hence, post initial blip use intraday dip towards 15618- 15642 for creating long position for the target of 15732

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 33642

Technical Outlook

* The daily price action formed a high wave candle with small real body and shadows in either direction highlighting intraday volatility .

* Going ahead, we expect the Banking index to gradually resolve higher and head towards 34500 levels in coming weeks which is higher band of bearish gap area of 13th June 2022 (34483 ) and 61 . 8 % retracement of preceding three week decline (36083 -32290 )

* In the ongoing expiry week, volatility is likely to remain elevated wherein buying demand is expected to emerge around 32800 levels . Hence any dips in coming week towards 33000 -32800 may be used as buying opportunity

* The index has key immediate support around 32100 -32300 levels as it is the last two week’s almost identical lows which also confluence with the March 2022 lows placed at 32155 levels

* Amongst momentum oscillators, weekly RSI has formed a positive divergence with last week reading of 38 against May 2022 reading of 37 while price made new low . Such divergence is indicating receding downward momentum and likely to trigger further technical pullback in coming weeks

In the coming session, index is likely to open on a negative note amid weak global cues . Volatility is likely to be high on account of the volatile global cues and monthly expiry on Thursday . After a negative opening use intraday dips towards 33080 -33150 being the 61 . 8 % retracement of the previous week up move (32335 -34180 ) for creating long position for the target of 33410 , maintain a stoploss at 32970

Nifty Bank Index – Weekly Candlestick Chart

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