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Nifty

• The Nifty started the week on a subdued note tracking weak Asian cues and subsequently drifted downward as an intraday pullback was short lived. The daily price action formed a bear candle carrying a lower highlow, indicating extended breather after past four week’s 9% rally

• The formation of lower high-low on the weekly chart signifies a pause in upward momentum amid overbought conditions. Going ahead, we expect the Nifty to undergo a healthy consolidation, which will help to cool off overbought conditions and form a higher base above the key support of 17800, which will eventually pave the way to challenge lifetime highs of 18600 in coming weeks as the broader structure remains strong. Thus, an extended breather from here on should be capitalised on as an incremental buying opportunity. Our positive stance is further validated by following observations:

• a) the index rallies are getting bigger with shallow retracements after breakout from past one year down trending channel indicating inherent strength

• b) sharp reversals in Dollar index, US yields have helped to taper down anxiety around further aggressive rate hikes, which is supportive for equities globally and also domestically

• c) Brent crude prices (-7% for the week) continued their down trend in a well channelled manner, which is supportive for Indian equities

• d) India VIX continued its lower high-low for a seventh week and stayed at multi month low indicating low risk perception among participants

• Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us confident to retain support base at 17800 as it is 38.2% retracement of past four week’s rally 16950-18442 coincided with 50 days EMA placed at 17746

• Over past couple of weeks, Midcap and small cap indices have lagged large caps. Structurally they are undergoing higher base formation above their 100 and 200 day averages. Both indices have retraced their 11-week rally from June lows by just 38% in equal time. Shallow retracement indicates inherent strength and we expect both indices to resume uptrend in December as they approach price/time maturity of correction

• In the coming session, index is likely open on a flat to positive note tracking mixed global cues. We expect index to trade with a positive bias while sustaining above 20 days EMA placed at 18070. Hence, intraday dip towards 18140-18172 should be used to create intraday long positions for target of 18259

Nifty Bank

• The daily price action formed a high wave candle with a small real body and shadows in either direction signalling continuation of the consolidation after strong up move of more than 13 % in the last seven weeks

• We expect the index to undergo healthy consolidation and form a higher base above the breakout area of 41500 after the recent strong up move which has led to weekly stochastic in overbought zone (91 ) . We believe dips should be used as an incremental buying opportunity for up move towards 43500 levels in the coming weeks being the 138 . 2 % external retracement of the recent breather (41840 - 37386 )

• Bank Nifty/Nifty ratio line is in steady up trend and is seen rebounding after retesting its 15 months range breakout area, indicating strength and continuation of the outperformance

• Structurally, in the Bank Nifty rallies are getting faster and stronger while corrections are shallow, underpinning inherent strength highlighting robust price structure

• The Bank Nifty has support at 41000 -41500 mark being the confluence of the (a) 23 . 6 % retracement of the last seven weeks up move (37387 -42622 ) placed at 41380 (b) the 10 weeks EMA currently placed at 40990 levels (c) the upper band of the recent eight weeks range breakout area placed around 41500 levels In the coming session index likely to open on a positive note amid mixed global cues . We expect the index to continue with its current consolidation with positive bias . Hence use intraday dips towards 42310 -42390 for creating long position for the target 42630 , with a stoploss of 42190

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