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Nifty: 17204

Technical Outlook

* The lacklustre session extended as Nifty oscillated in 100 points range over third consecutive session. As a result daily price action formed a high wave candle, indicating consolidation amid stock specific action

* Going ahead, a decisive close above 17250 levels would open the door for extension of ongoing up move towards 17600 in coming weeks. Failure to do so would lead to prolonged consolidation amid positive bias with stock specific action. In the process, bouts of volatility can not be ruled out as over past 8 sessions index has retraced 61.8% of preceding six sessions decline (17639-16410), indicating lack of faster retracement on either side. Thus, any dip from hereon should be capitalised on as incremental buying opportunity. Our target of 17600 is based on following observations:

* a) upper band of downward sloping channel of entire decline since October 2021 high of 18604

.* b) December 2021 high is placed at 17639

* Key point to highlight is that the Nifty midcap, small cap indices are undergoing slower pace of retracement as over past ten weeks both indices retraced 61.8% of preceding eight week’s rally. As a result, the broader market indices are forming a higher base above 100 days EMA which has been majorly held since June 2020. The formation of higher base signifies healthy consolidation that would set the stage for next leg of up move

* Structurally, index has bounced back after approaching maturity of price-time wise correction. Price wise, the index has maintained the rhythm of not correcting for more than 11% since May 2020. Time wise, the index has arrested secondary correction within nine weeks. In the current scenario, the index has corrected 11.8% over the past nine weeks. We believe the ongoing corrective phase would find its feet around 16600 as it is 80% retracement of current pullback (16410-17156) placed at 16560

In the coming session, the index is likely to open on a flat note amid muted global cues. We expect volatility to remain high owing to monthly derivative expiry. Hence use intraday dip towards 17210- 17240 for creating long position for target of 17329

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35063

Technical Outlook

* The daily price action formed a high wave candle signaling continuation of the consolidation in the broad range of 34000 -35500 in the last eight sessions

* Index need to start forming higher high -low in the daily chart on a sustained basis and close above 20th December 2021 bearish gap area around 35500 for any meaningful technical pullback to materialize towards 37200 levels in the coming weeks . Failure to do so will lead to a continuation of a range bound trade in the broad range of 34000 -35500

* Index after the recent sharp decline has approached oversold territory and is placed around the price/time wise maturity with previous three corrective decline as since March 2020 . Price wise previous three major decline was around 20 % each and time wise maximum corrective period is 9 weeks . In the current scenario we have already corrected by 19 % over past nine weeks and are approaching price/time maturity, offering favourable risk - reward over medium term

* On the higher side immediate resistance is placed at 35500 levels being the confluence of the 200 days EMA (placed at 35424 ) and the upper band of the Monday’s gap down area

* Among the oscillators the weekly stochastic continue to consolidate around the oversold territory and is currently placed at a reading of 19 .

* In the coming session, index is likely to open on a flat to positive note amid muted global cues . We expect the index to consolidate in a range with positive bias . Hence use intraday dips towards 35010 -35080 for creating long position for the target of 35340 , maintain a stoploss at 34890

Nifty Bank Index – weekly Candlestick Chart

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