IGI Logo

Stock specific activity to remain in focus amid progression of Q1FY22 earning season

Technical Outlook

* Despite initial decline, the corrective phase of the market remained tame as the Nifty staged a strong comeback in the second half of the week, in tandem with global peers. The weekly price action formed a small bull candle with sizable lower shadow, highlighting elevated buying demand emerged from lower band of consolidation coincided with 50 days EMA placed around 15600

* Key point to highlight during ongoing consolidation is that over past four consecutive weeks the index has managed to hold 15600 mark on multiple occasions, highlighting strong support base, which we do not foresee to breach. However, lack of faster retracement in either direction signal continuance of the current consolidation in the range of 15500- 15950. Going ahead a decisive close above upper band of consolidation 15950 backed by firm global cues and multi sector participation would open the door for next leg of up move towards our revised target of 16300 in coming month. Thus, dips from hereon should be capitalised on to accumulate quality stocks amid progression of Q1FY22 earning season. Our earmarked target of 16300 is based on following observations:

* a) implied target of recent consolidation (15900-15500) breakout is placed at 16300

* b) 138.2% extension of mid-June rally (15450-15915), projected from July low of 15633, placed at 16284

* We expect IT, metals, realty & infra, consumer discretionary to relatively outperform. BFSI is poised with attractive risk/reward proposition

* Our preferred large cap picks are SBI, Bajaj Finserv, Wipro, Tata Steel, Maruti while, in midcaps we like, Sonata Software, Intellect Design arena, Bata India, Bajaj Electricals, KNR constructions, Indocount Industries, JK Lakshmi cement, Tata Metaliks

* The Nifty midcap and small cap indices took a breather after past four weeks sharp up move. We believe, temporary breather from hereon would help broader market to cool off the overbought condition and form a higher base that would pave the way for next leg of up move

* Structurally, the persistent buying demand from key support zone of 15600-15500 signifies strong base formation, which we expect to hold going forward, as it is confluence of:

* a) 80% retracement of June-July rally (15450-15962), at 15500

* b) 10 weeks EMA placed at 15600 In the coming session, index is likely to open gap down tracking weak Asian cues. We expect buying demand to emerge around 15700-15730 after a gap down opening. Hence, use intraday dip towards 15730-15750 to create long for target of 15843

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 35034

Technical Outlook

* The weekly price action formed a Doji candle with a lower high -low as contrary to our expectation the index failed to generate a breakout above last seven weeks range (35800 - 34000 ) and extended the consolidation amid global volatility

* Buying demand emerged from the lower band of the last seven weeks range highlights presence of strong support around 34000 levels . Going ahead, we expect the index to hold above 34000 levels and witnessed a gradual pullback in the coming weeks towards the upper band of the range placed around 35800 levels

* The index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 -35810 ) over past seven weeks highlighting strength and a higher base formation

* We advise to capitalize the current breather as an incremental buying opportunity in quality large and mid -cap banks as the overall structure remains positive

* The index has support base at 34000 levels being the confluence of the following technical observations

* (a) The lower band of the last seven weeks’ consolidation range placed around 34000 levels

* (b) The rising 20 weeks EMA is also placed at 34000 levels

* Among the oscillators the weekly stochastic is sustaining above its nine periods average thus validates positive bias in the index in the coming weeks

* In the coming session, index is likely to witness gap down opening tracking soft Asian cues . We expect the index to witness a buying demand at lower levels around 34700 -34500 . Hence use intraday dips towards 34590 -34650 , for creating long position for target of 34870 , maintain a stoploss of 34470

Nifty Bank Index – Weekly Candlestick Chart

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer