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Nifty to consolidate in 18000-17300 range, form higher base…

Technical Outlook

• The index witnessed a roller coaster move during the week wherein the Nifty oscillated by ~1900 points as key events like Union Budget and US Fed meet unfolded. As a result, the weekly price action formed a piercing line bull candle, which retraced >50% of last week’s correction, indicating a pause in downward momentum as buying demand emerged in the vicinity of 52 week EMA placed around 17300

• Going ahead, we expect the index to consolidate in the broader range of 18000-17300 and form a higher base that would gradually pave the way to inch upward in coming weeks as the index has approached the maturity of price and time wise correction. The Nifty has retraced its nine week’s rally from September 2022 lows (16748-18887) by 61.8% over past nine weeks indicating the slower pace of retracement and inherent strength. Thus, use volatility during the week as buying opportunity in quality companies. While we are witnessing signs of support at lower levels near 17300, sustainability above Budget day high and 20-day EMA around 18000 would expedite the up move. Our positive stance is further validated by following observations:

• a) US Dollar index maintained a lower high-low on the weekly chart and sustained below 102, indicating continuance of corrective bias. Indian equities have an inverse correlation with the US dollar index. Thus, weak dollar leads to higher foreign inflows over medium term, b) globally, Nasdaq has resolved out of five month’s high while Dax, FTSE are hovering in the vicinity of their lifetime highs, indicating positive momentum globally. We expect domestic markets to perform in tandem with global peers

• Sectorally, we expect IT, BFSI, Auto, Infra to relatively outperform

• On the stock front, we prefer HDFC Bank, SBI, Maruti Suzuki, TCS, Titan, UltraTech Cement, L&T, Tata Steel while in midcaps we prefer PFC, Federal Bank, Sonata Software, FSL, Apollo Tyres, NCC, Jindal Saw, Sterlite Technologies, Data Patterns

• Structurally, slower pace of retracement signifies inherent strength that makes us believe, extended correction from hereon would get anchored around 17200 as it is confluence of: a) 80% retracement of OctoberDecember rally 16748-18887 b) Price parity of December decline (18887- 17774) projected from last week’s high of 18201 is placed at 17140 c) key long term moving average like 200 EMA & 52 weeks EMA

• The broader markets indices have bounced from lower band of four months consolidation. The follow through strength above last weeks high would open the door for extension of pullback towards upper band of consolidation amid progression of earning season.

• In the coming session, index is likely to open on a subdued note tracking muted global cues. We expect, index to prolong ongoing consolidation and form a higher base. Thus, intraday dip towards 17780-17812 should be used to create intraday long positions for target of 17897

Nifty Bank: 41499

Technical Outlook

• The weekly price action formed a bullish piercing line candle which retraced 50 % of last week’s correction indicating pause in downward momentum as buying demand on expected lines emerged from the long term 200 days EMA (currently placed at 39819 )

• Going ahead we expect the index to consolidate with positive bias in the broad range of 39500 -42000 . We expect the index to hold the key support zone of 39400 -39700 . Thus, we believe corrective decline from here on should be used as buying opportunity in quality banking stocks . A close above Budget Day high (42015 ) would expedite the up move

• Key point to highlight is that the ongoing secondary correction (11%) of the last eight weeks has hauled weekly stochastic oscillator near oversold territory with a reading of 23 . Structurally, over past eight weeks, the index has undergone shallow retracement of 65 % of its preceding 10 weeks rally of October –December (37387 -44151 ) indicating inherent strength

• The Bank Nifty has key support at 39400 -39700 marks as it is the confluence of the following technical observations : (a) 61 . 8 % retracement of the previous major rally (37387 -44151 ) at 39970 (b) the presence of long term 200 days EMA is also placed at 39795 (c) Price parity with the previous major decline of September 2022 (41840 -37387 ) as projected from the December 2022 all -time high of 44151 also signals support at 39500 levels

• The weekly stochastic is seen rebounding from the oversold territory and is currently placed at a reading of 29 , thus supports pullback in the index in the coming weeks

• In the coming session, the index is likely to open on a soft note amid mixed global cues . We expect, the index to consolidate with positive bias after Friday’s up move amid stock specific activity . Hence use intraday retracement towards 41270 -41350 for creating long position for the target of 41630 with a stoploss of 41160

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