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Nifty : 17214

Technical Outlook

* The index witnessed a lacklustre session as Nifty oscillated in 100 points range through out the session. As a result daily price action formed a small bear candle with shadow on the upper side, indicating breather after past two session sharp up move. In the process, broader market outperformed as small caps index gained 0.6%

* Going ahead, we reiterate our positive stance and expect Nifty to gradually head towards 17600 in coming weeks. However, we believe the up move from hereon will not be in a linear manner as over past seven sessions, Nifty has retraced 61.8% of preceding six sessions decline (17640-16410), indicating lack of faster retracement on either side. Hence, any cool off from hereon should be capitalised on as incremental buying opportunity as we expect the Nifty to gradually head towards 17600 in coming weeks as it is confluence of:

* a) upper band of downward sloping channel of entire decline since October 2021 high of 18604

* b) December 2021 high is placed at 17639

* The broader market indices are forming a higher base above 100 days EMA which has been majorly held since June 2020. Key point to highlight is that the Nifty midcap, small cap indices are undergoing slower pace of retracement as over past ten weeks both indices retraced 61.8% of preceding eight week’s rally. Slower pace of retracement signifies healthy retracement that would set the stage for next leg of up move

* Structurally, index has bounced back after approaching maturity of price-time wise correction. Price wise, the 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, the index has corrected 11.8% over the past nine weeks. We believe the ongoing corrective phase would find its feet around 16600 as it is 80% retracement of current pullback (16410-17156) placed at 16560

In the coming session, the index is likely to open on a flat note amid mixed global cues. We expect volatility to remain high owing to monthly derivative expiry. Hence use intraday dip towards 17170- 17200 for creating long position for target of 17283

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35045

Technical Outlook

* The daily price action formed a small bear candle with a long upper shadow as index for the second time in the last seven sessions has reacted lower from the immediate resistance area of 35500

* Index need to start forming higher high -low in the daily chart on a sustained basis and close above 20th December 2021 bearish gap area around 35500 for any meaningful technical pullback to materialize towards 37200 levels in the coming weeks . Failure to do so will lead to a range bound trade in the broad range of 34000 -35500 as seen in the last seven sessions

* Index after the recent sharp decline has approached oversold territory and is placed around the price/time wise maturity with previous three corrective decline since March 2020 . Price wise previous three major decline was around 20 % each and time wise maximum corrective period is 9 weeks . In the current scenario we have already corrected by 19 % over past nine weeks and are approaching price/time maturity, offering favourable risk -reward over medium term

* On the higher side immediate resistance is placed at 35500 levels being the confluence of the 200 days EMA (placed at 35440 ) and the upper band of the Monday’s gap down area

* Among the oscillators the weekly stochastic continue to consolidate around the oversold territory and is currently placed at a reading of 17 .

* In the coming session, index is likely to open on a flat note amid muted global cues . Volatility is likely to be high on account of the monthly expiry . We expect the index to consolidate in a range with positive bias . Hence use intraday dips towards 34860 -34930 for creating long position for the target of 35190 , maintain a stoploss at 34760

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