Equity benchmark concluded the weekly expiry session on a negative note to settle at 25,592 down 0.67% tracking global cues - ICICI Direct
Nifty :25598
Technical Outlook
Day that was…
Equity benchmark concluded the weekly expiry session on a negative note to settle at 25,592 down 0.67% tracking global cues. Market breadth was in favor of declines with an A/D ratio 1:2. Sectoral, barring Consumer Discretionary sector, all other sector indices closed in red, while Metals, IT and Auto were the laggards.
Technical Outlook:
* Nifty started the session on a negative note as intraday gains were shortlived session’s high. Consequently, the daily price action formed a bearish candle with a lower low–high structure, indicating extended corrective bias below its prior two-week low (25,700).
* Key point to highlight is that, the current decline is more of retracement of prevailing 1500 points up move. Additionally, short term chart suggest that index is undergoing slower pace of retracement as over the past 8- days, index has retraced 50% of its preceding 6-days, 900 points rally. Even Q2FY26 earnings have been in line with our expectations which makes us believe that current breather should not be construed as a negative instead dips should be used to accumulate quality stocks backed by strong earnings as key support is placed at 25400 being 50% retracement of recent up move coupled with one year downward sloping trend line breakout area at 25400. We believe, ongoing healthy consolidation would pave the way to ride next leg of up move towards All Time high of 26300 by the December. Meanwhile, to pause the ongoing corrective move, a decisive close above the previous session’s high will be essential.
Our positive bias is further validated by following observations:
* While sectors like private banks, auto, IT have paused for a breather, momentum is shifting towards, Metal, PSU Banks, Oil & Gas. This sectoral rotation signals a constructive baton change that could help in durability of ongoing uptrend amid global volatility, evolving tariff development and ongoing earnings season.
* Mirroring the Nifty, Midcap index resolved out of one year downward slanting trend line, indicating resumption of uptrend after one year hiatus. Amidst ongoing consolidation, market breadth has seen improvement as currently 62% stocks of Nifty 500 are trading above their 200 days EMA compared to one month rolling average of 56, indicating improvement in broader market participation.
Key Monitorable for the next week:
* FII's have turned positive after three months sell-off. Continued buying spree would boost market sentiment
* Development on India-US tariff negotiations
* Progression of Q2FY26 earning season
On expected lines, Gold has taken a breather amid overbought conditions. We expect gold to undergo healthy consolidation in $4400-$3700 range Intraday Rational:
* Trend- Undergoing healthy retracement
* Levels: Buy near Tuesday low
Nifty Bank : 57827
Technical Outlook
Day that was:
Bank Nifty closed the day on a negative note to settle at 57,827 down 0.57%. The Nifty PSU Bank index has relatively outperformed the benchmark backed by strong Q2 result from SBI to settle at 8,332 down 0.11%
Technical Outlook:
* Bank Nifty started the day on a negative note and traded within its previous session range through the day. As a result, the daily price action formed a inside bar with wicks on both ends, indicating range bond activity.
* Key point to highlight is that, over the past 8-days, the index has retraced 23.6% of its preceding 9-day, 2500 points rally, indicating slower of retracement. Index continues to consolidate above its allkey moving averages, signifies healthy ongoing sharp up move. Additionally, Index consolidation. Meanwhile, on momentum front, RSI in both weekly and monthly timeframe continue to sustain above the 60 reading, indicating bullish view intact. Hence, focus should be on accumulating quality stocks on dips backed by strong earnings as immediate support placed near 56,900 representing the 38.2% retracement of the ongoing up move (54,226-58,577).
* Structurally, over the past two decades, there have been 17 instances where Bank Nifty, following a decisive breakout above its previous two-month high, has delivered double-digit returns within the subsequent four months while surpassing its prior all-time high. In the current scenario, the index has once again confirmed a breakout above its prior two-month high, and surpassed the previous all-time high, reinforcing the prevailing bullish structure. This price action suggests a high-probability setup for sustained upside momentum, with scope for double-digit returns in the ensuing months.
* PSU Bank Index has relatively outperformed the benchmark. Index is maintaining its higher-high-low pattern for the nineth-consecutive week backed by strong Q2 performance from most of the PSU bank stocks, while forming higher base above its previous all-time high level. Going ahead, any dip from current levels should be seen as a buying opportunity, with immediate support placed near 7,800, which aligns with the 38.2% retracement of the latest upswing (6,730–8,373) Intraday Rational:
* Trend- Undergoing healthy retracement
* Levels: Buy near Tuesday low
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