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NSE (Nifty): 14549

Technical Outlook

*The index witnessed gap down opening on Wednesday and traded southward as intraday pullbacks were short lived. As a result, index formed a bear candle carrying lower high-low, indicating extended breather as index retraced 61.8% of past three sessions pullback in a single session

*Going ahead, intermediate support of 14400 would be the key level to watch, as holding above the 14400 (on a closing basis) would keep pullback option open. Only the decisive close below 14400 would result into breach of rhythm of not correcting more than 9% since May 2020 and lead to extended correction, else continuance of stock specific action amid rotational sectoral churn to continue. Therefore, dips should be capitalised to accumulate quality large cap and mid-caps in a staggered manner

*Broader market indices took a breather after past three session’s sharp pullback from 50 days EMA coincided with upward sloping trend line, which has been held on multiple occasions since June 2020. key point to highlight during recent correction is that, the Nifty midcap and small cap indices have maintained the rhythm of not correcting for more than 9-10% since March 2020. In the current scenario also supportive efforts emerged after correcting 8-9% while sustaining above 50 days EMA, indicating inherent strength. Hence, we believe broader market would regain upward momentum and relatively outperform the benchmark in coming weeks.

*Structurally, we believe the Nifty has strong support at 14400, as it is confluence of:

*a) 61.8% retracement of post budget rally (13662-15432), at 14338

*b) Friday’s panic low is placed at 14350

*c) positive gap seen on February 2 (14469-14281)

*In the coming session, volatility would remain high owing to monthly derivative expiry. In the process, breach of Wednesday’s low (spot14535) would lead to extended correction, else pullback option would remain open. Index forming lower high-low in daily chart so immediate bias remain corrective. Hence, use intraday pullback towards 14585-14608 to create short position for target of 14496.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 33293

Technical Outlook

*The daily price action formed a sizable bear candle with a lower high -low as contrary to our expectation the index gave up its entire previous sessions gains and closed below its previous week low (33361 )

*Going ahead , a follow through weakness and a sustained closing below Wednesday low (33203 ) will signal an extension of the decline towards the major support area of 32600 -32800 levels in the coming weeks

*A formation of higher high -low in the daily chart on a sustained basis and a firm closing above Tuesdays and last Fridays almost identical high (34360 ) will signal a pause in the current corrective trend

*The major support for the index is currently placed at 32600 - 32800 levels being the confluence of the following technical observations :

a) 61 . 8 % retracement of the previous rally (29687 -37708 ) placed at 32750 levels

b) Major breakout area of previous multiple highs

*The overall structure in the index remain positive as it has already taken 25 sessions to retrace just 50 % of preceding 14 sessions sharp up move (29687 -37708 , around 33500 . The slower pace of retracement signifies healthy retracement and a higher base formation

*The last six weeks corrective decline has lead to the weekly stochastic placed at an oversold territory with a reading of 16 indicating an impending pullback in the coming weeks

*In the coming session, volatility would remain high owing to monthly derivative expiry . In the process, breach of Wednesday’s low (33254 ) would lead to extended correction, else pullback option would remain open . Immediate bias remain corrective as index has breached previous week low . Hence, use intraday pullback towards 33490 -33560 to create short position for target of 33280 , maintain a stoploss of 33670

Nifty Bank Index – Daily Candlestick Chart

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