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Consolidation to extend amid stock specific action…

Technical Outlook

* The weekly price action formed a bear candle carrying higher high-low, indicating breather after the past two week’s rally. In the process, stock specific action prevailed as the broader market relatively outperformed

* The lack of faster retracement on either side signifies extended consolidation (14900-14400) in coming weeks amid stock specific action that would help index to form a higher base. Meanwhile, our medium term view of 15400 remains intact. Hence, traders can use bouts of volatility to their advantage to build long positions by accumulating quality large cap and midcap stocks amid progression of Q4FY21 earning season

* Sectorally, BFSI, infra and consumption provide favourable riskreward setup, while profit booking in Metal stocks after a sharp rally presents fresh entry opportunity

* Our preferred large caps are HDFC, Reliance Industries, Titan, Berger Paints, Tata Motors, SAIL while Bata India, Ipca Labs, Astral Poly, SKF Bearing, KNR Constructions, Dhanuka , GPPL, Philips Carbon are preferred within midcap space

* In line with our view, the Nifty midcap and small cap indices displayed inherent strength and scaled to a fresh 52-weeks high despite minor profit booking in the benchmark. Going ahead, we expect broader markets to maintain its relative positive price structure against benchmark

* Structurally, we do not expect the index to breach the key support threshold of 14200. Despite elevated volatility owing to concern over second Covid-19 wave, it has managed to hold the key support of 14200 and formed a higher base. Hence 14200 would continue to act as a key support as it is confluence of:

* a) 100 days EMA placed at 14300

* b) last month’s low placed at 14151

* In the coming session, the index is likely to open on a positive note tracking firm global cues. We expect Nifty futures to hold Friday’s low (14620) and trade with a positive bias. Hence, use intraday dip towards 14690-14720 to create long for target of 14808.

NSE Nifty Weekly Candlestick Chart

Nifty Bank: 32169

Technical Outlook

* The weekly price action formed a bear candle which mostly remained within previous week high -low range signalling consolidation and lack of follow through to previous two weeks up move

* Goining ahead, we expect the index to continue with its last two weeks consolidation with positive bias in the broad range of 31500 -33300 . The lack of faster retracement on either side signifies extended consolidation that would help the index to form a higher base

* The index has immediate support at 32000 -31500 levels being the confluence of the last two weeks low and the 61 . 8 % retracement of the previous up move (30405 -34287 )

* The index has maintained the rhythm of not correcting more than 20 % as witnessed since March 2020 . In the current scenario, it rebounded after correcting 19 % from the all -time high (37708 ) . Hence it provides favourable risk -reward setup for the next leg of up move

* Structurally , we do not expect the index to breach the key support threshold of 30000 -30500 . Despite elevated volatility owing to concern over second Covid -19 wave, it has managed to hold the key support of 30500 and formed a higher base . Hence 30500 -30000 would continue to act as a key support as it is confluence of :

- 200 days EMA placed at 30259

- last month’s low placed at 30405

* In the coming session, the index is likely to open on a positive note amid firm global cues . We expect the index to hold last week’s low (on a closing basis) and stage a pullback . Hence, use dips towards 32200 -32270 for creating long position for the target of 32395 , maintain a stoploss of 32155

* Among the oscillators, the weekly stochastic remain in up trend and is seen oscillating around the neutral reading of 50 indicating consolidation with positive bias in the coming weeks

Nifty Bank Index – Weekly Candlestick Chart

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