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Nifty : 25077

Technical Outlook

Day that was…

Equity benchmark extended the gains for the third straight session tracking positive global cues. Nifty gained 0.74% to settle at 25077. Nifty midcap outperformed by gaining ~1%. Sectorally, barring Metal and FMCG all indices closed in green. Where, IT, Health Care and Nifty Private Bank outshone.

Technical Outlook:

* Nifty started the week on a positive note, and witnessed strong buying while surpassing previous sessions high making higher-high-low throughout the session where intraday declines were bought into. As a result, the daily price action formed a bull candle indicating, continuation of upward momentum.

* Key point to highlight is that, the formation of higher-high-low over third consecutive session which has been missing since past Ten session indicates follow through strength, and confirmed resumption of uptrend opening the gates towards 25500 level in upcoming weeks, indicating inherent strength. We revise our support to 24500 which is 80% retracement of the previous upmove and recent swing low.

* 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 : 56104

Technical Outlook

Day that was:

* Bank Nifty extended its gain for fifty consecutive day and settled at 56,104 up 2.21%. The Nifty private Bank index has relatively outperformed the benchmark, ending the day at 27,490 up 1.22%.

Technical Outlook:

* Bank Nifty opened the week with a positive gap-up tracking optimistic quarterly business update. The index witnessed follow through buying interest post the gap-up, forming a bullish candle with a higher-high-low structure on the daily chart, indicating continuation of the ongoing uptrend.

* Key point to highlight is that, index has recovered its entire eightday decline within the last four consecutive session of gains, indicating a sharp turnaround and faster pace of retracement, which bodes well for a sustained upward momentum in the coming session. Additionally, Index has witnessed a breakout from the 2-month falling trendline resistance, that coinciding with previous swing high (55,800), indicating strength and potential for further upward momentum towards 56,800 being 80% retracement of the preceding decline (57628-53578). Therefore, any dip from current levels should be seen as a buying opportunity, with immediate support placed near 54,600, representing the 80% retracement of the ongoing up move (54,226-56,164).

* 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 underperformed the benchmark closing up 0.42%. The daily price action formed a small bull candle and closed above its previous session high, indicating continuation of its prevailing up move. Follow through strength above this level would help extend its current up move towards the measured target of 7,700. On the downside, initial support is placed at 7,181, which aligns with the 50% retracement of the latest upswing (6,730–7,567).

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