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NSE (Nifty): 17618

Technical Outlook

* The Nifty started Thursday’s session on a positive note. However upward momentum remained short lived as profit booking extended over a third consecutive session. The daily price action formed a bear candle confined within Tuesday’s trading range, indicating extended breather. The stock specific activity prevailed as the broader market continued to outperform the benchmark 

* The lack of faster retracement on either side signifies extended consolidation in the range of 17900-17400 in coming sessions. Over past four sessions index has retraced merely 61.8% of preceding four sessions up move (17326- 17948), indicating slower pace of retracement. Thus prolongation of consolidation amid stock specific action would continue. Meanwhile, upside will be capped at 17900.

* The broader market relatively outperformed the benchmark over a second consecutive session. We believe ongoing consolidation after ~15% rally seen over past four weeks would make the market healthy. Hence, dips should be capitalised on to accumulate quality stocks to ride the next leg of the up move

* Structurally, formation of higher peak and trough on the weekly chart signifies positive trend is still intact. We expect the ongoing corrective phase to get anchored around 17400 mark as it is confluence of: a) 80% retracement of past two week’s up move (17269-17948) at 17405 b) 20 days EMA at 17470, which has been held since July 2021

In the coming session, index is likely to witness gap down opening tracking weak global cues. The breach of Tuesday’s low (17620) indicates extension of corrective phase. Hence, post gap down opening use intraday pullback towards 17520-17545 for creating fresh short position for target of 17430.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37425

Technical Outlook

* The daily price action formed a small bear candle, the last two sessions price action remained contained inside Tuesday’s price range signaling a breather around the psychological mark of 18000 . Index in today’s session is opening gap down amid weak global cues signaling an extended profit booking after the recent up move

* Key observation is that the index since April 2021 has not corrected for more than three to four consecutive sessions, with three sessions of decline already behind us, we expect the index to maintain the rhythm and witness a rebound in the coming couple of sessions

* Going ahead, we expect the index to undergo a healthy consolidate in the broad range of 36200 -38000 in the coming week, thus forming a higher base for the next leg of up move

* Volatility is likely to remain high on account of the volatile global cues . Buying on decline strategy has worked well in the last 15 months, thereby the current volatility would present incremental buying opportunity in quality banking stocks

* The index has support base around | 36500 -36200 levels as it is the confluence of the following technical observations :

* 50 % retracement of the current up move (34817 -38112 ) placed around 36500 levels

* rising 50 weeks EMA also placed around 36430 levels

* The last week low is also placed at 36525 levels

* The recent three months consolidation breakout area is also placed around 36300 levels

* In the coming session, index is likely to open gap down amid weak global cues . We expect the index to trade with corrective bias on extended profit booking as forming lower high -low in daily chart . Hence after a negative opening use intraday pullback towards 37450 -37510 for creating short position for the target of 37210 , maintain a stoploss of 37610

Nifty Bank Index – Daily Candlestick Chart

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