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Technical Outlook

The Nifty inched up ahead of Karnataka Exit polls and US inflation print to settle at new four month high. The Nifty settled the session at 18315, up 50 points or 0.25%. In the coming session, the index is likely to open on a positive note amid mixed global cues. We expect the index to trade with positive bias while holding above 18250 levels. Stock specific action will continue to remain in focus amid higher volatility on account of weekly expiry. Hence, create long position in the range of 18290-18323 for the target of 18403, maintain stoploss at 18253.

Going ahead, our overall stance stays positive with a strategy to buy on dips as we expect index to gradually head towards 18500 in non linear fashion. While some profit taking at higher levels and volatility around US inflation data cannot be ruled out, retracement after sharp 10% rally in Nifty would make overall trend healthier. The percentage of stocks above 200 days EMA for the Nifty 500 universe have jumped to 55% compared to end of March reading of 40%, indicating improvement in broader market participation. Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us confident to retain support base at 17800-17700 as it is 80% retracement of last week’s rally (17554-18267) coincided with rising 20-days ema (17863)

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