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Nifty : 18321

Technical Outlook

Day that was…

The equity benchmark regained upward momentum after Wednesday’s decline. The Nifty gained 36 points or 0.2% to settle the session at 18321. The market breadth remained positive with A/D ratio of 1.25:1. Sectorally, FMCG, auto, metal remained at forefront while, financials extended breather

Technical Outlook

* The index witnessed a volatile session on a flat note wherein Nifty oscillated by 235 points amid monthly expiry session. The daily price action resulted into a bull candle with long lower shadow, indicating elevated buying demand in the vicinity of 20 days EMA which has been held since April 2023.

* We expect prolongation of consolidation in the broader range of 18500-18000. Key point o highlight is that, past eight sessions price action has been taking a shape of a contracting triangle, indicating narrow trading range amid stock specific action while sustaining above 20 days EMA, highlighting healthy consolidation that augurs well for next leg of up move. Therefore, any dip from hereon should be capitalized to accumulate quality stocks in a staggered manner. Structurally, our positive stance is further validated by following observations:

* A) The sustenance above 20 days EMA after bouncing from the lower band of consolidation (18000), signifies robust price structure

* B) The current consolidation is on the back of improving market breadth as currently 60% of the stocks are trading above 200 days EMA compared to April end reading of 48%, highlighting broader market participation

* C) we expect Nifty small cap space to witness catch up activity as many small cap stocks which are not part of small cap index are coming out of large consolidations. Highlighting point is that, the Nifty midcap index is hovering around All Time High whereas Nifty small cap index is still 17% away. Thus, quality small cap stocks should be in focus

* D) FII’s inflows have remained sturdy in May which is a key supporting factor for acceleration of structural uptrend ahead

* The broader market indices continued with their relative outperformance while maintaining higher peak and trough, indicating elevated buying demand. Thus, broader market should be in focus as we approach the fag end of the earning season

* Structurally, formation of higher high-low on the monthly chart signifies elevated buying demand that makes us confident to keep support base at 17800 as it is 38.2% retracement of Mar-May up move (16828-18458) coincided with 50 days EMA placed at 17890 In the coming session, index is likely to open on a flat note tracking mixed global cues. The elevated buying demand from 20 days EMA signifies inherent strength. Hence, use intraday dip in June future towards 18350- 18383 to create intraday long positions for target of 18467 with a stoploss of 18313

Nifty Bank: 43681

Technical Outlook

Day that was

The Bank Nifty traded in a range with high volatility and closed the monthly expiry session on a flat note amid mixed global cues . Both PSU and private banking stocks consolidated in a range . The Bank Nifty ended the session on a flat note up marginally by just 03 points at 43681 level

Technical Outlook

* The daily price action formed a hammer like candle as buying demand emerged from the lower band of the last eight sessions range and at the 20 days EMA (currently placed at 43402 ) signalling continuation of the consolidation after the recent strong up move of 15 % in the preceding eight weeks

* Going ahead, index is likely to extend the last eight sessions consolidation in the broad range of 44150 -43400 and form a base in the coming sessions amid higher volatility . Only a firm closing above the all -time high (44151 ) will open further upside . Index has key support at 42700 -42500 levels, dips should be used as a buying opportunity

* Key observation in the weekly chart of Bank Nifty is that it has witnessed a faster retracement of the 14week decline (44151 - 38613 ) during Dec22 -Mar23 in just seven weeks . Faster retracement in just half the time interval indicating structural improvement from medium term perspective

* On relative terms, Bank Nifty continues to outperform the Nifty . The Bank Nifty/Nifty ratio line continues to trend higher and maintain higher high -low signalling extended period of outperformance .

* The index has key support at 42700 levels being the confluence of the recent low and the 38 . 2 % retracement of the recent up move (39610 -44151 )

* Weekly Stochastic is seen reacting lower from the oversold territory, consolidation in the coming weeks will help the index to cool off the overbought condition In the coming session, the index is likely to open on a flat note amid mixed global cues . Index to extend its last eight sessions consolidation amid stock specific action . Hence, use intraday dips towards 43560 -43640 for creating long position for the target of 43890 , maintain stoploss at 43450

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