Bank Nifty extended its positive momentum for second consecutive week and settled at 54,809 up 1.28% - ICICI Direct
Nifty :25114
Technical Outlook
Week that was…
Equity benchmark extended gains over second consecutive week and settled at 25114, up 1.5%. Nifty midcap and small cap relatively outperformed the benchmark by gaining ~2%, each. Beaten down sectors like IT, Defence, PSU Banks staged a strong rebound while Consumer Discretionary took a breather.
Technical Outlook:
* Nifty started the week on a positive note, where buying demand emerged in the vicinity of 20/50-day EMA making higher-low formation. As a result, the weekly price action formed bull candle indicating, continuation of the upward momentum.
* Key point to highlight is that, the follow through strength in index on the back of GST Reforms supported by positive development on Tariff negotiations and buoyancy in global markets (as rate cut expectations in upcoming US Fed meet) boosted market sentiments. That in turn helped index to head towards upper band of contracting pattern (25100-24400).
* Going ahead, the formation of higher high-low back by improvement in market breadth makes us confident that Index will log a resolute breakout from contracting triangle (25100-24400). Further, positive outcome from US Fed meets as well as US Tariff negations would fuel the momentum to drive Nifty towards 25800 in coming months. Meanwhile, strong base of 24400 would continue to act as key support threshold.
* On the sectoral front, key index heavy weights like Bank Nifty and IT (carrying 45% weightage in Nifty) are getting ready for next leg of up move. Since December 2022, Bank Nifty is trading in a channelised move wherein the intermediate correction are getting arrested within 10% (average). While history suggest that, buying Bank Nifty near 52 weeks EMA has been fruitful over next 8 months. With current 7% correction, Bank Nifty approached 52 weeks EMA, suggesting index is approaching price wise maturity of correction amid oversold condition that augurs well for impending pullback. Meanwhile, Nifty IT index past 10 years data suggest that 35% correction offers incremental buying opportunity. With current 33% correction along with improvement in global macros (rate cut) would help index to revive upward momentum. Thereby offering favourable risk reward setup.
* On the market breadth front, the % of stocks above 50 days SMA have once again maintained the rhythm of bouncing from bullish support zone of 25%. The current jump to 48% clearly signifies broadening of market participation. On the broader market front, both Nifty Midcap and small cap have bounced from the vicinity of 52-week EMA amid oversold conditions, indicating an incremental buying opportunity from medium term perspective.
* Key monitorable:
* a) Development of Bilateral trade deal negotiations.
* b) Breakdown from one year falling trend line in US 10 Year Bond Yield along with Dollar index below 98 augurs well for emerging markets.
Nifty Bank : 54809
Technical Outlook
Week that was:
Bank Nifty extended its positive momentum for second consecutive week and settled at 54,809 up 1.28%. Nifty PSU Bank index has relatively outperformed the benchmark, ending the week positive at 7057 up 2.94%.
Technical Outlook:
* Bank nifty opened the week on a firm note and sustained followthrough buying demand above the previous week’s high. Consequently, the index formed a bullish weekly candle carrying a higher-high -low formation, signaling continuation of positive momentum and paving the way for further upside in the near term.
* Key point to highlight is that index has sustained above the recent upside gaps and managed a close above the 20-day EMA after 16 sessions, signaling revival in uptrend. In the coming week, any positive outcome from the US fed policy meeting along with tariff negotiation could act as a trigger, driving the index towards its previous swing high of 55,900. On the momentum front, weekly stochastic oscillator has witnessed bullish crossover from the oversold territory, with reading of 22, reflecting continuation of current upward momentum. Hence, any decline from current level should be viewed as a buying opportunity with an immediate strong support is placed at 53600 being 200-day EMA.
* Structurally, Since Dec-22 the intermediate correction within channelized move has been arrested within 10%. While buying near 52 weeks EMA has been fruitful over next 8 months. With current 7% correction Bank Nifty approached 52 weeks EMA, suggesting index is approaching price wise correction amid oversold condition that augurs well for impending pullback. Hence, immediate strong support is placed near the 200-day EMA placed at 53600.
* PSU Bank Index has relatively outperformed the benchmark and closed on a positive note. After initial gains Index has witnessed profit booking near its previous swing high near 7149, indicating breather after a strong up move, however, immediate support is placed near the rising trendline, aligning with the 50-day EMA (6935). Furthermore, the index continues to trade well above its previous multiple swing low support which coincides with the 200-day EMA placed near 6700, signals a broader uptrend is still intact.
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