Bank Nifty opened flat, stayed positive, but late profit booking pulled it lower -ICICI Direct
Nifty :25885
Technical Outlook
Day that was…
Indian equity benchmarks extended their losing streak for the third consecutive session, tracking weak global cues, and settled at 25,885, down 0.30%. The broader market outperformed, with the Midcap index advancing 0.36%. Barring IT and Oil & Gas, all other sectoral indices closed flat to positive, with Realty and PSU Banks emerging as top gainers..
Technical Outlook:
* Nifty opened on a flat note and faced profit booking near the 61.8% retracement of the previous session’s range. This led to the formation of a bearish candle on the daily chart, reinforcing the continuation of the ongoing corrective bias.
* Today Nifty is likely to open on a positive note tracking firm global cues on the backdrop of easing of geopolitical concerns. Notably, the index has extended its corrective leg to close near the 20-day EMA (25,840), marking a healthy retracement after the sharp two-week rally. Going ahead, a follow through strength with decisive close above the previous session’s high would signal a pause in the current downward phase; failure to do so may push the index into a time-wise consolidation within the 25,600–26,300 range. Meanwhile, strong support remains at 25,600, which aligns with the 61.8% retracement of the recent upmove (25,318–26,246) and coincides with the 50-day EMA.
* In the process, both Midcap and Smallcap indices closed in the green and did not exhibit follow-through selling after the recent decline. A sustained move above their respective previous session highs would indicate that the corrective phase in the broader market is stabilizing and could facilitate a gradual upward resolution.
Following observations makes us reiterate our positive stance:
* The current leg of up move is led by Bank Nifty and followed by Midcap index which has hit a fresh all-time high this week, while Nifty is shying away 0.5% from its peak. Meanwhile, Small cap index is still trading below 10% from its all-time high. We expect, catch up activity to gradually pan out in small cap space in coming weeks
* Strong Q2 earnings and improving macro indicators bodes well for durability of ongoing up move.
Key Monitorable for the next week:
* US and India Tarde Deal: Tracking nearing closure news of the US and India trade deal has kept Indian market upbeat. The favourable outcome could accelerate the positive momentum in the market and pave the way for return of FII’s in the Indian markets.
* GDP data: US & India
* Brent Crude Oil: dropped ~3% during the week. Further cool off in Brent crude oil bodes well for domestic market
* Indian Rupee: Indian Rupee has depreciated and recorded new low of 89.5. Further decline in rupee could temper market sentiment
Intraday Rational:
* Trend- After two days lower high-lower-low structure index has approached its key support of 20-dayEMA
* Levels: Buy on declines previous session close (26050)
Nifty Bank : 58820
Technical Outlook
Day that was:
Bank Nifty closed the volatile session on flat to negative to settle at 58835 down 0.05%. The Nifty Private bank index has mirrored the benchmark, closing down at 28,348 down 0.17%.
Technical Outlook:
* Bank Nifty opened the day on a flat note and remained positive for most of the session; however late-hour profit booking dragged near the 80% retracement of the previous session range dragged the index lower. The daily price action resulted in a inside bar candle, indicating selling at elevated levels.
* A key observation is that the index has undergone a healthy retracement over the last three sessions, approaching the 38.2% retracement of the prior upswing. This zone also aligns with the 10-day EMA, indicating a time-based consolidation phase rather than a structural deterioration. Hence, any dip from hereon should be viewed as a constructive pause within the broader uptrend, offering an opportunity to accumulate quality banking names, especially those delivering strong Q2 earnings performance as immediate support is placed near 58,000, being 50% retracement of the ongoing advance (57,157–59,440) and expect the index to gradually resolve higher towards our projected target of 60,000 in the coming month.
* Historically, there have been 17 instances over the past two decades where Bank Nifty, following a decisive breakout above its previous twomonth high, delivered double-digit returns within the subsequent four months. In the current setup, the index has once again confirmed a breakout above its prior two-month high and surpassed the previous alltime peak, reaffirming the prevailing bullish structure. This setup indicates a high-probability continuation pattern for sustained upside momentum in the coming months.
* The PSU Bank Index has relatively underperformed the benchmark index this week. However, index managed to maintaining a higher-high -low formation for the twelve-straight week on the back of strong Q2 earnings. The index has advanced ~1800 points(+27%) over the last 12 weeks, pushing the stochastic oscillator into the overbought territory on both weekly and monthly timeframes hence, increases the probability of shortterm healthy consolidation phase. However, any dip from hereon should not be construed as negative instead capitalized it as buying opportunity in quality stock as strong support is placed near 7,900, aligning with the 38.2% retracement of the latest rally (6,730–8,624) and 50-day EMA.
* Intraday Rational:
* Trend- Higher base formation above previous breakout zone (58,577)
* Levels Buy on declines near prior two session identical low (59060)
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