IGI Logo

Nifty : 21647

Technical Outlook

• The index witnessed a rangebound activity post positive opening. As a result, daily price action resembles a doji like candle, indicating rise in volatility.

• Going ahead, we expect index to prolong the ongoing consolidation in the broader range of 21800-21300 amid stock specific action which would prevail as we enter in the Q3 earning season. Further, a decisive close above 21800 would open the door for next leg of up move.

• Structurally, index is undergoing slower pace of retracement as over past ten sessions it merely retraced 38.2% of preceding five session’s up move (20977- 21801). The shallow retracement followed elongated rallies above short term average signifies inherent strength.

• 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. Thus, extended breather should not be construed as negative instead focus should be on constructing quality stocks portfolio at lower levels.

• 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: 47438

Technical Outlook

• The index started the session on a positive note and then traded choppy for rest of the session in a narrow range of 47400 -47600 indicating lack of directional bias . It however formed higher high -low as supportive efforts emerged, amid oversold readings (stochastic on daily chart at 15 , from key short term support of 46900 which is value of multiple swing lows over past four weeks

• We expect technical pull back towards current week high at 48150 in coming sessions amid overall consolidation as we enter earnings season . Meanwhile on relative basis PSU banks are expected outperform in the medium term and dips should be used as buying opportunity

• 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

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631