IGI Logo

Nifty

• The range bound activity continued over a fifth consecutive session wherein it oscillated in 150 points range. The daily price action formed a small bear candle carrying lower high-low, indicating extended breather amid stock specific action

• The index is taking breather after recent 1500 points sharp up move seen during past four weeks. We believe, ongoing breather would help index to cool off the short term overbought condition and help index to form a higher base that would pave the way to challenge the all-time high of 18600 in the coming sessions and eventually head towards 18900 by December 2022. Thus, extended breather from here on should be capitalised on as incremental buying opportunity as we do not expect the index to breach the key support of 17800. Our positive stance on the market is based on following observations:

• a) the Nifty is sustaining above the breakout area of past 13 month consolidation phase placed at 18100, indicating end of corrective phase and beginning of structural uptrend

• b) US$, INR pair has reversed from its key resistance around 83 mark on expected lines, supported by similar sharp reversal in US dollar index from multi year trend line resistance. Sequential lower high-low formation in US$, INR pair to favour inflows in Indian equities

• c) India VIX is hovering near six month’s low of 15 indicating low risk perception from market participants

• d) global equity indices made sharp bullish reversal last week. Dow Jones industrial average has given a breakout from 11-month long declining channel indicating end of corrective phase and expected to pose a technical pullback thereby supporting overall bullish sentiment

• Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us confident to retain support base at 17800 as it is 38.2% retracement of past four week’s rally 16950-18442

• The broader market indices are forming a higher base above 52 weeks EMA. We expect, Nifty midcap, small cap indices to accelerate upward momentum and witness catch up activity against the Nifty

• In the coming session, index is likely open on a positive note tracking firm Asian cues. We expect index to trade with a positive bias amid choppy consolidation. Thus, intraday dip towards 18348-18382 should be used to create intraday long positions for target of 18466

Nifty Bank

• The daily price action formed a small bull candle with an upper shadow signalling consolidation at all time high after the recent strong up move

• The index is seen extending its up move after recently generating a breakout above the last eight weeks range (41840 -37387 ) signaling strength . Going forward, we expect the index to gradually head towards 43500 levels in the coming weeks being the 138 . 2 % external retracement of the recent breather (41840 -37386 ) . Hence, any dips should be used as an incremental buying opportunity in quality banking stocks

• Bank Nifty/Nifty ratio line is in steady up trend after retesting its 15 months range breakout area, indicating strength and continuation of the outperformance

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength highlighting robust price structure

• The Bank Nifty has support at 40700 mark being the confluence of the (a) 38 . 2 % retracement of the last seven weeks up move (37387 -42622 ) placed at 42700 (b) the 10 weeks EMA currently placed at 42690 levels

• Among the oscillators the weekly MACD remain in strong up trend and is seen sustaining above its nine periods average thus validates positive bias

• In the coming session index likely to open on a positive note amid firm Asian cues . We expect the index to trade with positive bias while maintaining higher high -low . Hence after a positive opening use intraday dips towards 42380 -42460 for creating long position for the target 42720 , with a stoploss of 42270

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
SEBI Registration number INZ000183631

Above views are of the author and not of the website kindly read disclaimer