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NSE Nifty

Technical Outlook

* The weekly price action formed a bear candle carrying lower highlow, indicating extended profit booking after 13% post Budget rally. Over past 9 sessions index has retraced 50% of preceding 11 sessions sharp up move (13597-15432), at 15514. The slower pace of retracement signifies healthy retracement that helped weekly stochastic to cool-off overbought conditions (placed at 75)

* Going ahead, we believe extended correction from here on would offer an incremental buying opportunity as we do not expect the index to breach the key support threshold of 14300. Hence, any dip from here on should not be construed as negative. Instead it should be capitalised on to accumulate quality large cap stocks as we expect index to consolidate in the broad range of 14900-14300 wherein broader market would continue to outperform

* Sectorally, we expect PSU, Metal, Capital goods and Infra to outperform. On the stock front, quality stocks like Tata Steel, Adani Ports, Elgi Equipments, KSB Pumps, HAL, Amber, Tata Chemicals, PNC Infra, Deepak Nitrite are expected to relatively outshine

* We expect ongoing correction to get anchored around 14300 based on following observations: a) Since May 2020, the index has not sustained below its 50 days EMA. That subsequently offered a fresh entry opportunity. Currently, the 50 days EMA coincided with rising trend line drawn adjoining April- Sept low (8055-10790) is placed at 14300 b) Price wise, the index has not corrected for more than 8- 9%. In the current scenario, 8% correction from lifetime highs would be at 14200 c) Time wise, secondary correction has not lasted for more than a week, since May 2020

* Key point to highlight during the week is that despite extended profit booking in the benchmark broader market continued to outshine as, both Nifty midcap and small cap indices concluded the week with ~1% gain. In the process, Midcap index scaled a fresh all-time high. We expect broader market to endure its relative outperformance, wherein catch up activity would be seen in small caps, as it is still 16% away from its life-time highs

In the coming session, Nifty future is likely to witness gap up opening tracking firm Asian cues. We expect, index to trade with a positive bias after bouncing from oversold territory. Hence, use intraday dip towards 14635-14660 to create long position for target of 14747

NSE Nifty Daily Candlestick Chart

Bank Nifty

Technical Outlook

* The weekly price action formed a bear candle with a long upper shadow signalling profit booking for a second consecutive week after more than 25 % post Budget rally . Over past nine sessions index has retraced just 38 . 2 % of preceding 13 sessions sharp up move (29688 -37708), at 34645 . The slower pace of retracement signifies healthy retracement that helped weekly stochastic to cool off overbought conditions (currently placed at 77 )

* Going ahead, we believe extended correction from here on would offer an incremental buying opportunity as we do not expect the index to breach the key support threshold of 34000 . Hence, any dip from here on should not be construed as negative . Instead it should be capitalised on to accumulate quality banking stocks in a staggered manner .

* The key support threshold of 34000 , is the confluence of the following observations : a) The 50 % retracement of the budget rally (30906 -37708 ) placed at 34307 b)The price parity with the previous major correction (32842 - 29688 ) as projected from the recent all time high (37708 ) signals major support around 34000 levels

* On the higher side the index has immediate resistance at 36500 being the confluence of the Friday’s bearish gap area and 61 . 8 % retracement of the of the last two sessions decline (37232 - 34659 )

* In the coming session, the index is likely to open on a positive note on the back of firm Asian cues . volatility would remain high owing to volatile global cues . We expect the index to trade in a range and attempt a pullback after last session sharp decline . Hence after a positive opening use dips towards 34980 -35040 for creating intraday long position for the target of 35270 , maintain a stoploss at 34870

Bank Nifty Index – Daily Candlestick Chart

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