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Nifty :24894

Technical Outlook

Week that was…

Equity benchmark concluded volatile truncated week on a positive note as RBI's Banking reforms boosted the market sentiments. Nifty gained ~240 points to settle at 24894. Broader market outperformed by gaining ~2%. Sectorally, all indices closed in green. Where, PSU Bank, Metal and Nifty Financial Services outshone.

Technical Outlook:

* Nifty started the week on a flat note, and witnessed buying demand in the vicinity of 80% retracement of the last leg of up move and filled the gap (24878-24868) and closed near week’s high. As a result, the weekly price action formed a small bull candle indicating, pause in down move.

* Key point to highlight is that, over past ten sessions index has undergone retracement of prevailing up move wherein follow through strength has been missing. Hence, sustainability above 24800 levels over next couple of sessions would revive the upward momentum and confirm resumption of uptrend driving Nifty towards 25300-25500 zone in upcoming weeks. Meanwhile, strong support is placed in the range of 24400-24200 zone.

* Structurally, Nifty has rallied 18% off April low, within which intermediate corrections arrested within 3-5% range. Meanwhile, timewise, over past three decades, there have been 12 instances wherein index has staged a strong rebound after consecutive 8 sessions negative close, garnering 7% rolling return in a month. In current scenario, with 3.5% correction already in place along with 8 consecutive negative close, we expect index to maintain the same rhythm and stage a strong rebound. Hence focus should be on accumulating quality stocks with strong earnings.

* Further, as per seasonality, October despite being a volatile month, has been one of the best month for markets in last 12 years. Nifty has given positive returns on 9 out of 12 occasions. The average return for Nifty for October in last 12 years was >3%.

* On the sector front, BFSI, Metal & Oil & Gas which cumulatively carries 50% weightage in Nifty would provide impetus to head toward 25500 in coming weeks. a. Bank Nifty has witnessed buying demand from 100 days EMA which has been held since April that helped index to recoup last week’s lost ground and closed above 55500 marks. b. Nifty Metal Index: The formation of higher peak and trough helped index to trade in the vicinity of All time High after 15 months. c. Oil & Gas : After 3 months breather Oil & Gas sector resuming uptrend post strong base formation at 200 days EMA.

* Key Monitorable:

* a) Development on tariff negotiations

* b) Beginning of Q2FY26 earning season

* c) Quarterly business updates

* d) Brent crude decline below 4 months low resulted into revers flag breakdown, indicating continuation of corrective bias. Falling crude oil prices bodes well for domestic market.

Nifty Bank : 55589

Technical Outlook

Week that was:

* Bank Nifty ended the week on a positive note, post boosted sentiment from RBI policy and settled at 55,589 up 2.21%. The Nifty PSU Bank index has relatively outperformed the benchmark, ending the week at 7,583 up 4.43%.

Technical Outlook:

* Bank Nifty opened the week with a positive note, index witnessed emerging buying demand in the vicinity of previous week’s low. As a result the weekly price action formed a strong bull candle carrying higher-high-low formation, indicating inherent strength.

* Key point to highlight is that, index has established a higher base above 200-day EMA and is currently approaching the previous swing high resistance at 55,800, indicating strength and potential for further upward momentum. Going ahead, a decisive breakout above 55,800 would open the gates for a rally towards 56,800 being 80% retracement of the preceding decline (57628- 53578).

* Following favorable GST reforms, focus now shifts to tariff negotiations, where any constructive outcome could act as a potential catalyst. Therefore, any dip from current levels should be seen as a buying opportunity, with immediate support placed near 54,000, representing the 80% retracement of the ongoing up move (53,561-55,835).

* Structurally, over the last eight weeks, the index has retraced only 38.2% of its preceding 16-week, 21% rally. This slower pace of retracement followed by a subsequent rebound which was the strongest of the last three recovery attempts reinforces the view of an underlying uptrend resumption.

* The PSU Bank Index has relatively outperformed the benchmark closing up 4.43%. The weekly price action formed a strong bull candle and closed above its previous swing high 7,567, indicating continuation of its prevailing up move. Follow through strength above this level would unlock further upside potential towards the measured move target of 7,700. On the downside, initial support is placed at 7,170, which aligns with the 50% retracement of the latest upswing (6,730–7,567).

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