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Nifty : 21619

Technical Outlook

Day that was… Equity benchmark eked out gains tracking muted global cues. The Nifty settled Wednesday’s session at 21619, up 74 points up 0.3%. The market breadth turned positive with A/D ratio of 1.1:1 as midcap index performed in tandem with the bemchmark by gaining 0.3%. Sectorally, Metal, IT, Consumer Durables remained in limelight while FMCG, PSU Bank relatively underperformed Technical Outlook

• The index started the session on a subdued note. However, supportive efforts from 21450 mark helped index to recoup intraday losses and settled the session on a positive note. Consequently, daily price action appears to have formed a piercing line candle, indicating elevated buying demand.

• We expect, prolongation of consolidation in the broader range of 21800-21300 amid stock specific action would prevail as we enter in the Q3 earning season. Key point to highlight is that, the index is undergoing slower pace of retracement as over past nine sessions it merely retraced 38.2% of preceding five session’s up move (20977-21801). Further, a decisive close above 21800 would open the doors for next leg of rally. Thus, extended breather should not be construed as negative instead focus should be on constructing quality stocks portfolio at lower levels. We believe, ongoing breather after past two months spectacular up move (16%) would make market healthy and pave the way for next leg of up move as strong support is placed at 21300

• The formation of higher peak and trough backed by sectoral rotation makes us confident to retain support base at 21300 as its is confluence of: a) 61.8% retracement of recent up move (20977-21834) b) 20 days EMA placed at 21297 c) past two week’s low of 21329

Nifty Bank: 47360

Technical Outlook

 EM Day that was : The Nifty Bank index snapped three day losing streak amid weekly expiry session . Recovery in heavyweight private banks helped NiftyBank index to close Wednesday’s session at 47360 , up 118 points or 0 .25 %

Technical Outlook :

• The index started the session on a negative note amid muted global cues however recouped early losses as it recovered from psychological mark and support of 47000 and then spent rest of the session in a narrow range of 47200 -47400 .

• On daily chart, it formed thrusting line bull candle indicating supportive efforts as daily stochastics approached oversold reading (15), however maintained lower high -low formation indicating lack of reversal . Only a sustained close above previous session highs would be first sign of pause in downward momentum and recovery toward key hurdle of 48150 which is current week’s high

• Meanwhile, we expect 46900 to act as immediate support as it is lows of past four weeks range and important swing lows

• Structurally, index is undergoing retracement of November – December rally wherein it rallied around 15 % over 9 week period . Couple of weeks consolidation in the broad range of 46500 -48500 would make larger trend healthier and provide fresh entry opportunity . Hence investor should take benefit of ongoing decline to build long positions with focus on PSU banking space which we expect to outperform over medium term

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