Bank Nifty ended the day on a positive note at 60669, up 0.9% - ICICI Direct
Nifty :25867
Technical Outlook
Day that was… The Indian equity market started the week on a high note, buoyed by a historic India-US trade agreement signed over the weekend and a supportive global environment. Nifty settle at 25860 up 0.65%. Market breadth was heavily skewed in favour of bulls with an A/D ratio of 3.5:1. Broader market stole the show and significantly outperformed the benchmark with Nifty Mid and Smallcap index gained ~2% and ~3% respectively. Sectorally, all the indices closed in green wherein PSUs banks, Consumer durables and Realty where the top gainers.
Technical Outlook:
* The Index opened with a positive gap-up and remained range-bound within a~90 points band throughout the session. The daily price action resulted in a runaway gap candle, completely retracing the decline of the previous three sessions in single trading day, indicating renewed bullish momentum after recent consolidation.
* The index staged a strong rebound from the gap-support zone, coinciding with the 20-day EMA (25,500). The current leg of the upmove is supported by broad-based participation across the broader market, with the Nifty Midcap index trading just ~2% below its all-time high, while the Smallcap index has recovered nearly 8% from its recent lows. Taken together, these developments reinforce a constructive market sentiment and pave the way for a potential runaway move for Nifty to challenge the All Time High of 26350 in the upcoming weeks.
* In the process, bouts of volatility amidst geopolitical development, inflation print and fag end of earnings season cannot be ruled out. In this backdrop, any decline should be capitalized to accumulate quality stocks with strong earnings as strong support is placed at 25200 being 61.8% retracement of recent up move (24571-26341) coincided with 200 days EMA
Our positive bias is further validated by following observations:
* The key index heavy weights like financials, oil & gas, Auto (carrying >50% cumulative weightage of Nifty) have regained the momentum which would provide impetus for next leg of up move
* On the broader market front, Nifty midcap once again defended 52 weeks EMA over last nine months while small cap index witnessed supportive efforts from lower band of six months falling channel. The improving market breadth would result into broadening of the ongoing rally.
* Market breadth has been witnessing improvement, as the percentage of stocks trading above their 50 days SMA has bounced from bearish extremes of 15% to 52% levels, while percentage of stocks above 200- day SMA within the Nifty 500 universe enhanced to 42%. Historically, such contractions in breadth have preceded durable market bottoms, with extreme bearish readings near 15% marking inflection points in the past
Key Monitorable:
* US and India’s Inflation print
* Brent Crude is heading towards 9 months resistance trend line placed at 72. Only a decisive close above 72 would result into extended rally
Intraday Rational:
* Trend- Preceding three-days decline recovered in a single session, indicating faster pace of retracement
* Levels- Buy around 80% retracement of yesterday up move(25854- 25940)
Nifty Bank :60669
Technical Outlook
Day that was:
Bank Nifty ended the day on a positive note at 60669, up 0.9%. The Nifty PSU Bank relatively outperformed gaining 3.4% led by strong Q3 earning from SBI.
Technical Outlook:
* Bank Nifty opened with a positive gap-up (60,495–60,150) and, consolidated within the 60,500–60,876 range throughout the session. The day concluded with a small-bodied candle positioned above the gap area, reflecting sustained buying interest even at elevated levels.
* The index has been consolidating near its former resistance, now acting as support(57628) in line with the change-of-polarity principle, and has decisively closed above the recent swing high of 60,400. Going forward, we expect a sustained follow-through strength above this level would emerge that will reinforce bullish momentum and open the path for a resumption of the uptrend towards 61,000.
* Near term, volatility is likely to stay elevated ahead of the upcoming inflation data. Any corrective declines from current levels should be viewed as buying opportunities as strong demand zone is identified near 59,300, being 50-day EMA and 61.8% retracement of the current up move (57,783-61,674).
* Meanwhile, the Nifty PSU Bank Index registered a breakout above its prior intermediate highs and closed firmly above that level, reinforcing near-term bullish momentum. Going forward, the index is expected to advance toward the 9,600 zone, corresponding to the measured range breakout of the 8,172– 9,705 band Intraday Rational:
* Trend- Rebounded from former resistance now turned as support as per change of polarity principal.
* Levels - Buy around 80% retracement of yesterday upmove(60513-60818).
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