IGI Logo

Strong support is placed at 16200 for upcoming truncated

Technical Outlook

• The geopolitical jitters dominated the week that triggered a spike in crude oil. As a result, the index breached the key support of 16800, contrary to our expectation. The weekly price action formed a bear candle carrying a lower high-low, indicating extended correction. Meanwhile, lower shadow signifies supportive efforts in the vicinity of 52 weeks EMA

• In the upcoming truncated week, volatility is expected to remain high tracking ongoing geopolitical concerns. Consequently, global cues will dictate the future trend. In the process, we believe holding above key support threshold of 16200 would keep pullback options open. Further, a decisive close above 16800 along with cool off in VIX and crude oil will add fuel to the ongoing pullback rally towards 17200 as it is the 61.8% retracement of February decline (17795- 16203), placed at 17186

• Key point to highlight is that, time wise index has maintained the rhythm of not correcting for more than three consecutive weeks, since April 2020. In the current scenario, as the index has already corrected over past three weeks, we believe Nifty is poised for a technical pullback from the oversold territory. On the downside, 16200 will be the key level to watch, as it is a confluence of:

• A) Price parity of October – December decline (18604 -16410), projected from January high of 18350

• B) current week’s panic low is placed at 16203

• Amidst elevated volatility following sectors offer favourable risk reward: BFSI, IT, Metal, Capital goods and auto

• On the stock front, in large caps we like Infosys, SBI, Bajaj Finance, Hindalco, Tata Motors, Titan while in Midcaps we prefer Siemens, Apollo Hospital, Timken, Inox Leisure, Trent, Mindtree

• The broader market indices relatively underperformed the benchmark in the week went by. The Nifty midcap and small cap indices have closed marginally below 52 weeks EMA. Thus, we expect broader market to relatively underperform the benchmark in the coming week In the coming session, index is likely to open on a subdued note tracking muted Asian cues. Only a follow through strength above Friday’s high (16763) would open pullback options, else consolidation amid elevated volatility owing to escalating geopolitical issues. Thus, use intraday pullback towards 16710-16740 for creating short position for target of 16623

Nifty Bank: 36430

Technical Outlook

• The weekly price action formed a bear candle with a lower high -low and a long lower shadow, indicating extended correction as contrary to our expectation the index breached the support area of 37000 . Meanwhile, lower shadow signifies supportive efforts in the vicinity of 52 weeks EMA .

• In the upcoming truncated week, volatility expected to remain high tracking ongoing geopolitical concerns . Index holding above key support threshold of 35000 would keep pullback options open . Further, a decisive close above 37000 along with cool off in VIX and crude oil prices will lead to a pullback rally towards 38100 levels in the coming week being the confluence of the previous week high and 80 % retracement of February decline (39424 -34991 )

• The index has support around 35000 levels being the confluence of the following :

• (a) 80 % retracement of the previous up move (34018 - 39424

• (b) lower band of the rising channel in place since last one year is placed around 35000 levels

• (c) the rising 52 weeks EMA is placed at 35500 levels

• Among the oscillators the weekly 14 periods RSI is seen forming a base around the neutral reading of 40 , signaling an impending pullback in coming weeks In the coming session, index is likely to open on a negative note amid weak Asian cues . Volatility is likely to remain high on account of the volatile global cues . In today’s session we expect the index to witness selling pressure at higher levels . Hence after a negative opening use pullback towards 36720 - 36800 for creating short position for target of 35460 , maintain a stop loss at 36910

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer