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Nifty: 16521

Technical Outlook

• On expected lines, index resolved higher and approached near our earmarked target of 16600. The index started the session with a gap up opening and oscillated in 100 points range through out the session while sustaining above the gap area (16340-16490). As a result, daily price action formed a small bear candle carrying higher high-low, indicating continuance of positive bias

• The past four sessions 720 points rally has hauled index to upper band of rising channel (as shown in adjoining chart) amid overbought condition of daily stochastic oscillator (currently placed at 94). Thus, we believe, a decisive close above 16600 would open the door for extension of ongoing up move else couple of day’s breather can not be ruled out wherein broader market would witness catch up activity. However, such breather should not be construed as negative instead dips should be capitalised as incremental buying opportunity

• Key point to highlight is that, the formation of higher high-low supported by across sector participation signifies rejuvenation of upward momentum that further validated by improving market breadth. The breadth indicator, measured by percentage of stocks above 50 DMA has seen significant improvement with a reading of 66% compared to April end reading of ~45%, indicating broad based participation that augurs well for durability of ongoing up move which makes us confident to revise support base upward at 16100 as it is confluence of:

• a) 80% retracement of recent up move (15858-16588)

• b) positive gap recorded on 18th July (16050-16142)

• c) 20 days EMA is placed at 16070

• On the broader market front, the benchmark index Nifty and midcap index have approached their 200 days EMA, however small cap index is still 7% away from its 200 days EMA. Thus, we expect catch up activity to be seen in the broader market. Hence, focus should be on accumulating quality mid and small caps amid ongoing Q1FY23 earning season

• In the coming session, index is likely to open on a flat note tracking muted global cues. We expect the index to consolidate in a range after recent strong up move amid weekly expiry. Hence, use intraday dip towards 16450-16482 for creating long position for the target of 16567

NSE Nifty Daily Candlestick Chart

Nifty Bank: 35972

Technical Outlook

• The daily price action formed a high wave candle with a higher high -low signaling positive bias . The index in the process formed a higher high in the monthly chart after three months signaling strength and continuation of the current pullback rally

• The index on Wednesday session has almost tested our immediate target of 36300 . The immediate bias continues to remain robust hence follow through strength above 36300 will open further upside towards 37500 levels in the coming months being the 80 % retracement of the previous major decline (38765 -32290 ) placed at 37430 levels

• However, the up move towards 37500 levels is likely to be in a non -linner manner, bouts of volatility owing to volatile global cues should not be seen as negative instead dips towards 35000 -34800 should be capitalised as a buying opportunity

• Key observation in the recent market correction and during the last four -week pullback is that the Bank Nifty is relatively outperforming the Nifty . It is also highlighted in the Bank Nifty/Nifty ratio chart as it is seen breaking above the falling supply line joining recent highs highlighting strength and continuation of the current outperformance

• The formation of higher high -low on the weekly chart makes us confident to revise the support base higher towards 34500 levels as it is the confluence of the last week low and the 50 % retracement of the recent up move (33080 -35761 )

• Among the oscillators, the weekly stochastic remain in strong up trend thus supports the overall positive bias in the index .

In the coming session, index is likely to open on a flat note amid muted global cues . We expect the index to consolidate after the recent strong up move with positive bias amid weekly expiry . Hence use intraday dips towards 35700 -35780 for creating long position for the target of 36040 , maintain a stoploss at 35590

Nifty Bank Index – Weekly Candlestick Chart

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