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Nifty : 19384

Technical Outlook

• The volatile session ended on a negative note weighed down by fag end sell-off. As a result, daily price action formed a bear candle, indicating extended breather. In the process, stock specific action prevailed as Nifty midcap, small cap indices gained ~0.5%, each.

• The index is undergoing healthy consolidation as over past seven sessions Nifty has been trading in 19500-19300 range. We believe, ongoing healthy consolidation will gradually pave the way towards 19700 in coming week. In the process, stock specific action would prevail onset of earning season.

• Key point to highlight is that, since March Nifty has not corrected more than 400 points while sustaining above 20 days EMA. Consequently, buy on dips has been the prudent strategy to adopt. Thus, any decline from hereon should not be construed as negative instead capiatliase it as an incremental buying opportunity since we do not expect index to breach the key support threshold of 19100.

• Despite profit booking in the benchmark, Nifty midcap endured its northbound journey by clocking fresh all time high while small cap index recorded fresh 52 weeks high. However, key point to note is that the Nifty midcap and small cap indices have approached overbought conditions after past fourteen weeks >25% rally. Thus, bouts of volatility at higher levels can not be ruled out. Secondary correction is part of the structural up trend. Thus, dips in broader market should be capitalized to build a quality portfolio amid ongoing earning season

• Structurally, the formation of higher peak-trough on the monthly chart signifies elongation of rallies that makes us confident to retain support base at 19100, as it is :

• a) since March Nifty has not corrected more than 400 points. In current scenario 400 points correction will mature at 19123

• b) 50% retracement of current up move (18645-19523), at 19085

Nifty Bank: 44639

Technical Outlook

• The Daily price action formed a bear candle with continuation of lower high -low for sixth session in a row indicating continuation of profit booking near life highs, as upward momentum exhausted after 17 % rally over past fifteen weeks .

• We expect index to consolidate in coming week amid positive bias in the 44000 -45500 range . Sustaining above last week high of 45500 would indicate resumption of upward momentum towards 46300 in July as it s 138 . 2 % external retracement of Dec -Mar decline (44151 -38613 ) . Buy the dips

• PSU banks are expected to relatively outperform as PSU banking index is poised for multi year breakout indicating structural turnaround

• From structural perspective, Bank Nifty has retraced its December – March decline in faster time . Hence any temporary breather from hereon would provide fresh investment opportunity to ride the uptrend

• The formation of higher peak and trough on the larger degree chart makes us confident to revise support base at 44000 as it is 61 . 8 % retracement of most recent up move from lows of 43300 and confluence of rising 50 day ema

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