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Nifty :24793

Technical Outlook

Day that was…

• Indian equity benchmarks closed on a flat note amid heightened geopolitical conflict in Middle East. The Nifty settled at 24793 down 19 points. The market breadth reached bearish extreme reading, with an A/D ratio of 1:4, as the broader market relatively underperformed both Smallcap100 and Midcap100 indices were down by ~2%. . Sectorally, barring Auto all sectors closed in red where, PSU Bank, Realty and Metal underperformed.

Technical Outlook:

• After the initial up move, profit booking emerged in the vicinity of 50% retracement of the previous sessions range and the index traded within narrow range. This led to the formation of Doji candle with upper and lower wick, signaling indecision. Key point to highlight is that, past five sessions lackluster move is accompanied by below-average volumes, and today’s daily trading volumes continued the same trend with sub-90k crores volumes while the average volumes is 1.07 lac crores, indicating, lack of broader market participation.

3• Past four session index is trading in contracting range(25000-24700), either side breakout will dictate the trend. Going ahead, we expect volatility to remain elevated tracking geopolitical issues and spike in crude oil prices which is hovering near $77 levels. Historically, we have observed that such geopolitical scenarios result into near term volatility wherein possibility of knee-jerk reaction cannot be ruled out. Hence, we advise dips should be capitalised to buy quality stocks from medium to long term perspective. Strong support is placed at 24500, whereas, resistance is at 25200.

• In the last four decades there have been six major geopolitical escalations. On each occasion it formed major bottom once anxiety around the event settled down. Investing in such panic reactions with long term mind set has been rewarding as index has witnessed double digit returns in subsequent three months.

• Structurally, the elongation of rallies followed by shallow correction is a perfect recipe of bull market. In current scenario, over past 25 sessions index has retraced merely 23.6% of preceding 25 sessions 16% up move. Slower pace of retracement indicating robust price structure that bodes well for next leg of up move.

• On the broader market front, Nifty midcap is undergoing healthy retracement after 28% rally which should be used as buying opportunity as it has not corrected >6% since April low, while on the weekly chart it has not closed below its previous week’s low. In current scenario, despite ongoing volatility, midcap index has been maintaining the same rhythm. Further, the ratio chart of Nifty 500/Nifty 100 has been inching upward that clearly indicates relative outperformance. On the market breadth front currently 46% of stock in the Nifty 500 universe are trading above 200 days SMA compared to last month reading of 30% signaling renewed momentum.

• Key monitorable which would provide cushion to the ongoing up move:

• a) Development of geopolitical concern

• b) Brent crude faced resistance at $78. Lack of follow through strength would result into consolidation in 78-66 levels

• c) Further weakness in US Dollar index

• d) Bilateral Trade Agreement between India and US

• The key support threshold of 24500 for the Nifty is based on lower band of past four weeks consolidation coincided with 50% retracement of recent rally (23935-25222) and Friday’s panic low is placed at 24473

Nifty Bank : 55577

Technical Outlook

• The Bank Nifty closed on a negative note, amid heightened geopolitical conflict in Middle East . The index settled at 55 ,577 , down 0 .45 % . The Nifty Pvt Bank index mirrored the benchmark, closed on a negative note at 27694 , down 0 .30 %

Technical Outlook :

• The Bank Nifty started the day on a flat note, after the initial up move, profit booking emerged in the vicinity of previous sessions high that resulted into lower -high -low throughout the session where intraday rally were sold into and managed to close above previous sessions low and made a small bear candle, signaling breather .

• Past four session index is trading in contracting range(56000 - 55400), either side breakout will extend the range where the upper consolidation is placed at 57049 . While, strong support is placed at 55000 and 54500 zone, which is 50 -day EMA coincides with lower consolidation zone . Any, decline from current levels would offer incremental buying opportunities . Key point to highlight is that, over past five weeks Bank Nifty has managed to close above last week’s low . In current scenario, despite ongoing geopolitical worries it has maintained the same rhythm by sustaining above its last weeks low, indicating uptrend is intact . Since April supportive efforts are emerging in the vicinity of 20 -day EMA indicating inherent strength .

• Structurally, the Bank Nifty is witnessing an elongation of rallies followed by shallow retracements, signifying a robust price structure . The April months up -move of 14 % is stronger compared to the March month’s 9 % rise . Additionally, the declines are becoming shallower, with the April months decline being 4 . 6 % versus 5 . 4 % in March 2025 after recent 7 % upmove we expect same rhythm to continue where the current decline should be seen as buying opportunity .

• Underperforming the benchmark the PSU Bank index witnessed third session of profit booking where it took support at 50 -day EMA and closed on a negative note . The index broke out from an eleven -month falling trendline on 19th May and, since then, has been forming a higher -high -low structure on weekly which is intact, indicating strong upside momentum . While the Bank Nifty is trading 3 % below its all - time high, while the PSU Bank index is still trading ~20 % below its all -time high, presenting a compelling case for a catch -up move . Meanwhile, immediate support on the downside is placed at 6 ,600 , which is the 50 % retracement of the rally from 7th April 2025 to 9th June 2025 coincided with 100 -day EMA .

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