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Nifty : 19396

Technical Outlook

• The index witnessed a rangebound activity wherein Nifty oscillated by 60 points range. The daily price action resulted into, small bear candle carrying higher high-low, indicating extended breather amid stock specific action

• Going ahead, for a meaningful pullback to materialise, index need to decisively close above previous week’s high of (19482) that would confirm the pause in downward momentum. Failure to do so would lead to prolongation of consolidation in 19500—18900 range amid stock specific action.

• The broader market endured with its relative outperformance as Nifty midcap index clocked a fresh All time high while small cap index inched closer to its All time high. However, past five months remarkable >30% rally which hauled weekly stochastic oscillator in overbought territory that suggests impending breather amid stock specific action that would make broader market healthy

• Key point to highlight is that, the benchmark is approaching maturity of its price and time wise correction. Historically, in a secular bull market intermediate corrections to the tune of 5-7% has always presented incremental buying opportunity to ride structural bull run. While, time wise, index has not corrected for more than four consecutive weeks, since June 2022. In current scenario, Nifty has already corrected 4% over past four weeks, thus couple of percentage decline can not be ruled outs. However, such correction should not be construed as negative instead dips should be utilized as buying opportunity as we believe strong support is placed at 18900 levels.

• Structurally, index is undergoing slower pace of retracement as over past four weeks index has retraced 50% of preceding four week’s rally of 18646-19991 that has made market healthy by cooling off overbought conditions (as weekly stochastic oscillator hauled to 20 levels). Thus, we believe extended correction from hereon would find its feet around key support of 18900 being confluence of:

• A)80% retracement of current up move (18645-19991), at 18915

• B)as per change of polarity concept, earlier resistance of 18887 will now act as key support

• C)100 days EMA is placed at 18868

Nifty Bank: 43993

Technical Outlook

• The price action for the day formed small bear candle as prices failed to generate follow through buying and sustainability above declining 10 -day average . Index has corrected about 5 % from recent life highs (46369 ) over past four weeks leading prices towards price/time wise maturity of correction and oversold readings on weekly stochastics (13 )

• In the current week we expect Nifty Bank to trade in 43300 - 44600 range with relative outperformance from PSU pack . Only a sustained close above 44600 would indicate more meaningful reversal as it is confluence of prior week highs and key moving averages . Following are Our view is backed by following key observations

• 38. 2 % retracement of entire rally since March 2023 lows (38613 -46369 ) is placed at 43400

• June swing low at 43345

• Price wise current decline from highs would equate the last decline before March bottom (3000 points)

• Time wise, since June 2022 index has not formed more than three to four consecutive bear candles . With four bear candles behind us we expect downward momentum to halt and index to attempt a bounce back

• PSU Banking index is at the cusp of multi year breakout and seen relatively outperforming . We expect this relative outperformance to further amplify in coming months

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