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NSE (Nifty): 14721

Technical Outlook

*The daily price action formed a bear candle carrying lower highlow, indicating extended correction. The selling pressure accelerated on breach of Tuesday’s low around 14900

*Going ahead, 14700 will be the key levels to watch, as holding above 14700 on a closing basis would keep pullback option open towards psychological mark of 15000. Failure to do so will lead to extended breather. Bank Nifty is also placed around the key support area of 34000. As it commands 40% weight in Nifty, hence holding above the key support area of 34000 on a closing basis will lead to a meaningful pullback in bank index which would lead the Nifty higher. Therefore, buying in quality large caps and midcaps stock on dips would be the prudent strategy to adopt at current juncture

*Key point to highlight since September 2020 is that, on multiple occasions index has respected the 50 days EMA and offered a fresh entry opportunity to ride next leg of up move. Currently, Nifty is sustaining above 50 days EMA, placed at 14616

*The broader market indices are undergoing healthy retracement after recent outperformance, as over past eight sessions Nifty midcap and small cap indices have retraced 50% to 80% of preceding four sessions up move. Slower pace of retracement signifies healthy consolidation that will help index to cool off the overbought condition of weekly stochastic oscillators

*Structurally, we do not expect index to breach the key support threshold of 14700 as it is confluence of:

*a) The 80% retracement of past two weeks up move (14468- 15336), at 14642

*b) Past two week’s low is placed at 14639

In the coming session, the index is likely to open gap up on the back of strong global cues. Volatility would remain high owing to the weekly derivative expiry. We expect the index to maintain positive bias after a gap up opening. Hence, after a positive opening use intraday dips towards 14810-14835 to create long position for target of 14924.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 34229

Technical Outlook

*The daily price action formed a sizable bear candle with a lower high -low and a close below last three weeks low signalling continuation of the corrective bias . The index is currently placed around the crucial support area of 34000 ahead of the Federal reserve policy meeting outcome on Wednesday

*Going ahead, index sustaining above the crucial support area of 34000 on a closing basis will lead to a pullback in the coming sessions . Failure to do so will lead to extension of the current corrective decline

*The index is currently placed around the major support area of 34000 being the confluence of the following technical observations 

a) The 50 % retracement of the budget rally (30906 -37708 ) placed at 34300 levels

b) The rising 50 days EMA placed at 34107 levels

c) the rising trendline support joining lows since September 2020 as can be seen in the adjacent chart is also placed around 34200 levels

*In the coming session, the index is likely to open gap up o n the back of strong global cues . Volatility is expected to remain high on account of the weekly derivative expiry . We expect the index to trade with positive bias after a gap up opening . Hence after a positive opening use dips towards 34390 -34450 for creating intraday long position for the target of 34680 , maintain a stoploss at 34280

Nifty Bank Index – Daily Candlestick Chart

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