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Nifty :24275

Technical Outlook

Day that was…

Equity Benchmark edged higher tracking firm global cues. Nifty gained 80 points or 0.3% to settle the session at 24275. In the process, market breadth remained in favour of advances with A/D ratio of 2.2:1 as broader market outperformed the benchmark. Sectorally, Metal, auto, Oil & Gas outperformed while pharma, realty, IT took a breather

Technical Outlook:

* The supportive efforts from Tuesday’s low helped index to inch higher. The daily price action resulted into bull candle while consolidating in a narrow range, indicating extended breather after recent 1000 points sharp up move

* We believe, ongoing consolidation would make market healthy by forming a higher base above the breakaway gap (23956-24125) that would eventually pave the way to surpass immediate hurdle of 24500 in coming weeks. In the process, we expect Nifty to hold the key support threshold of 23700. Hence, dips should be utilized to accumulate quality stocks in a staggered manner. Our constructive view is based on following observations:

* a) Faster pace of retracement at 52 weeks EMA, indicates structural improvement in the short term as six sessions decline got retraced in just two sessions.

* b) Past three decades historical data exhibit that December months seasonality favours bulls with 73% success rate wherein average returns have been around 3%

* c) The Index has a tendency to reverse the course of action on arrival of key Fibonacci number. Current correction has completed 8 weeks

* d) Breadth indicator (% of stocks above 50 days SMA in Nifty 500 Universe) has bounced from its bearish extremes of 12. Meanwhile, weekly stochastic recorded bullish crossover amid oversold conditions, indicating impending pullback

* Structurally, since covid lows, average intermediate bull market corrections have been to the tune of 10% in Nifty and 9% in Bank Nifty. With 11% correction in Nifty and 8% correction Bank Nifty is already in place, we expect index to maintain the same rhythm and stage a pullback in coming weeks while holding key support zone of 23700 as it is confluence of:

* a) 61.8% retracement of current rally (23263-24350), placed at 23675

* b) Long term rising trend line that has been held over past 2 years

Nifty Bank : 52302

Technical Outlook

Day that was :

The Bank Nifty traded with a positive bias and gained 0 . 2 % to settle Wednesday’s session at 52302 . The PSU Banking index relatively underperformed the benchmark

Technical Outlook

* The index staged a rebound after initial blip . However, stiff resistance from 52500 resulted into decline in the index . The daily price action formed an inside bar that confined within Tuesday’s price action, Indicating breather after recent sharp up move .

* Going ahead, follow through strength along with a decisive close above 52600 would confirm the resumption of uptrend that can result into extended up move towards 53500 . The Bank Nifty index has been sustaining above the breakout area of 9 weeks falling trend line, indicating pause in downward momentum . The ratio chart of Bank Nifty/ Nifty has been pointing upward, indicating relative outperformance that makes us believe, index would eventually challenge the upper band of consolidation (placed at 52600 ) and head towards 53500 . Meanwhile, key support is placed at 50000 as it is 200 days EMA coincided with 80 % retracement of recent up move (49787 -52555 )

* Structurally, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 3 - 4 weeks before unfolding next leg of up move . In current scenario, with ~ 8 % correction already in place, we expect Bank Nifty to maintain the same rhythm and stage bounce in coming sessions

* The PSU bank index taken a breather after past two sessions up move that resulted into a doji like candle . Going ahead, we expect PSU Bank index to resolve higher and surpass September 2024 high of 7050

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