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Nifty to consolidate amid stock specific action…

Technical Outlook

* The Nifty has undergone profit booking near the psychological mark of 18000 after past two months’ 15% rally that hauled weekly stochastic in overbought territory. The weekly price action formed a bear candle carrying higher high-low, indicating profit booking from all-time high of 17948

* Key point to highlight is that, over past five sessions the index has retraced 80% of preceding four sessions up move (17326-17948). The slower pace of retracement signifies healthy consolidation amid stock specific action. Going ahead, we expect the ongoing consolidation of the index to get prolonged in the broader range of 17800-17200 amid global volatility and ahead of Q3 earnings. In the process, we expect the Nifty to maintain the rhythm of not correcting for more than 4-5% observed since April 2021. We believe the ongoing correction after 15% rally would make market healthy and offer a fresh entry opportunity that has been observed over past eighteen months. Thus, extended correction from hereon should not be construed as negative instead dips should be capitalized to accumulate quality stocks

* On sectoral front, PSU, Consumption, Energy, Auto space to remain in focus, however metals offer favourable risk reward

* In large caps we prefer SBI, PEL, Reliance, Gail, Tata Motors, Tata Steel, Titan while in Midcaps we prefer Trent, Canara Bank, Atul, Amber, Bata India, JSL, Ambika Cotton, FSL, GPPL.

* We expect, broader market indices to extend ongoing consolidation amid stock specific action wherein unlock, retail, chemical, textile themes to remain in focus. Thus, dips should be capitalized to accumulate quality stocks

* Structurally, formation of higher peak and trough on the larger degree chart signifies positive trend is still intact. We expect the ongoing corrective phase to get anchored around 17200 mark as it is confluence of: a) Since April 2021, index has maintained the rhythm of not correcting for more than 4%. In current scenario 4% from all time high of 17948 will complete at 17200 b) 80% retracement of September up move (17055-17948) , at 17233

In the coming session, index is likely to open on a flat note amid subdued Asian cues. We expect Nifty to hold the intermediate support of 17400 in today’s session. Hence, use intraday dips towards 17445-17485 for creating long position for target of 17569

NSE Nifty Daily Candlestick Chart

Nifty Bank: 37226

Technical Outlook

* The weekly price action formed a bear candle signaling a breather after testing the psychological mark of 38000 . We believe the current breather will make the index healthy after the recent up move of more than 10 % in the preceding five weeks

* In the coming week, we expect the index to continue with its healthy consolidation in the broad range of 36200 -38000 amid stock specific activity ahead of the Q 3 earnings

* Volatility is likely to remain high in the coming week on account of the volatile global cues . Buying on decline strategy has worked well in the last 16 months, thereby the current volatility would present incremental buying opportunity in quality banking stocks

* In the smaller time frame, over past four sessions index has retraced just 80 % of preceding four sessions up move (36526 - 38377), indicating a slower pace of retracement and a positive price structure

* 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 10 weeks EMA is placed at 36540 level

* The upper band of the recent three months range breakout area is placed around 36300 levels

* In the coming session, index is likely to open on a flat note amid soft Asian cues . We expect the index to trade in a range and consolidate in 37000 -37500 levels amid high volatility . Hence use intraday dips towards 37090 -37150 for creating long position for the target of 37390 , maintain a stoploss of 36970

Nifty Bank Index – Weekly Candlestick Chart​​​​​​​

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