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Nifty

• The index witnessed a gap up opening (18608-18671) tracking firm global cues. The daily price action resembles a Doji like candle carrying lower high-low, indicating continuance of positive bias amid stock specific action. The Nifty midcap and small cap relatively outperformed by gaining 0.7% each

• We expect the index to maintain its northbound trajectory and challenge the all-time high around 18900. Eventually, we expect the index to head towards 19400 in January 2023. In the process, we expect broader markets to relatively outperform benchmarks. Our positive stance on the market is based on the following observations:

• a) the index underwent slower pace of retracement after breakout from 13 month’s consolidation, validating inherent strength

• b) sharp improvement in breadth over the past two weeks. Net number of 52 week high/low from Nifty 500 universe has doubled, indicating improved broader market participation

• c) declining crude oil prices helping to cool down worries on the fiscal front and supporting bullish market sentiments

• d) Dollar Index and US 10 year yields, which have inverse correlation with equities, continue to head lower with lower highlow formation

• We expect the Nifty midcap index to challenge the all-time high while catch up activity would be seen in small cap space in coming weeks. Key point to highlight is that ratio chart of Nifty 500/Nifty 100 has turned up from lower band of one year range, indicating outperformance of midcap/small caps against large cap

• Structurally, shallow correction along with elongation of rallies indicates inherent strength that makes us confident to retain support base upward at 18300 as it is confluence of: a) 80% retracement of late November rally 18133-18887 is placed at 18284 b) as per change of polarity concept January high of 18350 would now act as key support c) Past two week’s low at 18365

• In the coming session, index is likely open on a subdued note tracking muted global cues post fed meet outcome. We expect index to hold 18600 amid elevated volatility owing to weekly expiry. Thus, intraday dip towards 18630-18662 should be used to create intraday long positions for target of 18747

Nifty Bank

• The daily price action formed a high wave candle with a higher high -low signalling continuation of the positive momentum as the index scaled a fresh all -time high (44151 ) on Wednesday session

• Going ahead, we expect the index to maintain positive bias and head gradually towards 44600 levels in the coming weeks being the 161 . 8 % external retracement of the September 2022 breather (41840 -37387 ) . Dips should be used as a buying opportunity index has strong support placed around 42500 levels

• Going forward, a temporary breather cannot be ruled out as the weekly stochastic after the recent sharp rally is placed at an overbought territory with a reading of 90 . However, it will be confirmed only on formation of a lower high -low sequence . We believe corrective decline towards the support area of 42500 levels should be used as a buying opportunity for next leg of up move

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength highlighting robust price structure

• The Bank Nifty has support at 42500 mark being the confluence of the (a) 23 . 6 % retracement of the last 10 weeks up move (37387 -43983 ) placed at 42426 (b) the 10 weeks EMA currently placed at 42230 levels

• In the coming session index is likely to open on a soft note tracking weak global cues . We expect the index to continue its consolidation amid stock specific action . Midcap and PSU banking stocks are expected to continue with their outperformance . Hence use intraday dips towards 43870 - 43950 for creating long position for the target of 44180 , with a stoploss of 43770

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