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Nifty : 19575

Technical Outlook

• The index witnessed a rangebound session wherein Nifty oscillated 60 points range. As a result, daily price action formed a bull candle with lower shadow over second consecutive session, indicating elevated buying demand. Meanwhile, Nifty midcap and small cap indices clocked fresh life highs, highlighting inherent strength

• The formation of higher high-low signifies positive momentum, that makes us confident to believe that Nifty would challenge the upper band of consolidation placed at 19600 and open the door for next leg of up move. Past six week’s healthy retracement helped index to cool off the overbought conditions in large caps while broader market relatively outperformed. Therefore, we expect large caps to regain upward momentum in coming sessions. Thus, buying on dips would continue to act as prudent strategy. Our positive bias is based on following observations:

• a) past five weeks slower pace of retracement helped index to cool off overbought conditions as weekly stochastic bounced from extreme oversold conditions

• b) The global indices have seen revival in upward momentum post four weeks decline, indicating resumption of up trend

• c) Dollar Index taken a breather after approaching the upper band of declining channel placed at 105. The follow through weakness below last week’s low will confirm reversal in trend

• The Nifty midcap and small cap indices have been showing immense strength by enduring series of recording new All Time Highs. We expect broader market to continue with its relative outperformance amid overbought conditions owing to past five months spectacular rally of >38%

• The index showed relative strength by displaying supportive efforts from intermediate support of 19200 on multiple occasions. Thereby, we revise support base upward at 19200 being confluence of:

• a) 61.8% retracement of current up move (18645-19991), at 19160

• b) Past two weeks identical low is placed at 19224

• c) 50 days EMA is placed at 19314

Nifty Bank: 44532

Technical Outlook

• The price action for the day resulted in a small candle as index traded choppy and remained enclosed within Monday’s price range indicating extended consolidation as index remains in a broad range of 45000 -43800 for past three weeks while holding key support of 43500 despite global volatility

• Going forward, we expect index to hold key support of 43500 and challenge upper band of consolidation at 45000 mark . Sustained close above 45000 would indicate end of corrective phase and extended gains in coming weeks . Our view is backed by following key observations

• Index is holding key support around 43500 over past three weeks as it is 38 . 2 % retracement of entire rally since March 2023 lows (38613 -46369 ) coinciding with June swing low at 43345 and 100 - day ema

• Past six weeks corrective phase has been shallow and led prices to oversold conditions . Shallow retracement indicate continuation of structural uptrend

• PSU Banking index has spend entire august in a consolidation . While large cap banks may consolidate, smaller PSU banks are seen outperforming going ahead

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