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Nifty: 17640

Technical Outlook

• The pullback after a gap down opening remained short lived. As a result, the index drifted southward during the session. The daily price action formed a bear candle carrying lower highlow, indicating extended breather. In tandem with benchmark, broader market took a breather after seven consecutive sessions up move

• Key point to highlight is that, over past three sessions index has retraced 61.8% of preceding two session up move. Lack of faster retracement signifies healthy retracement of recent up move that would help the index to cool off the overbought conditions and pave the way for next leg of up move as the elongation of rally signifies improving price structure. Hence, investors should focus on buy on dips strategy as we expect buying demand to emerge in the 17700-17500 zone

• The broader market indices have taken a breather after recent sharp up move. Key point to highlight on Nifty Midcap index is that, the current up move of ~18% is larger in magnitude compared to December-January up move of 14%. Further, this up move is backed by improving market breadth as the breadth indicator (percentage of stocks above 50-DMA of the Nifty 500 universe) has soared to 74% compared to mid February (Russian invasions on Ukraine) swing high reading of 25%, indicating inherent strength that augurs well for durability of ongoing up move going ahead.

• Structurally, the formation of higher peak and trough on the weekly chart supported by improving market breadth signifies rejuvenation of upward momentum that makes us confident to retain support base at 17400 mark as it is 61.8% retracement of current up move (17004-18114), placed at 17428 In the coming session, index is likely to open on a flat note amid muted global cues. The slower pace of retracement signifies healthy correction. Thus, we expect buying demand to emerge at lower levels post RBI Policy outcome. Hence, use intraday dips towards 17706-17738 for creating long position for target of 17795

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37557

Technical Outlook​​​​​​​

• The daily price action formed a bullish Inverted Hammer candle at Monday’ Bullish gap area (37148 -37665 ) indicating an attempt to hold support ahead of key event after three day breather retraced preceding two session gains by just 50 % indicating shallow nature of retracement and inherent strength in ongoing uptrend

• Buy on dips strategy has worked well during the recent up move, which is likely to continue, hence the current breather should not be seen as negative instead should be used as buying opportunity as we do not expect Nifty to breach support area of 37100 -36700 being the confluence of the following observations

• (a) Monday’s bullish gap up area placed around 37100

• (b) The recent breakout area above last two weeks high is placed around 36700 levels

• Going ahead we expect the index to form a higher base and resume its primary uptrend and gradually head towards February 2022 high of 39400 levels in the coming weeks

• Among the oscillators the daily stochastic is seen cooling off from the overbought territory, signaling consolidation and a higher base formation in the coming sessions

In the coming session, index is likely to open on a flat to positive note tracking muted global cues . We expect buying demand to emerge around 37500 levels . Hence use intraday dips towards 37510 -37580 for creating long position for target of 37840 , maintain a stop loss at 37390

Nifty Bank Index – Daily Candlestick Chart

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