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Nifty :24336

Technical Outlook

Day that was…

Equity benchmark inched downward ahead of US Fed meet outcome. Nifty dropped 332 points to settle Tuesday’s session at 24336. The market breadth turned in favour of declines with A/D ratio of 1:2 tracking profit booking in recently rallied stocks. Sectorally, all major indices ended in red weighed down by financials, auto, metal, Oil & Gas

Technical Outlook:

* The index started the session on negative note and gradually inched southwards as intraday pullbacks were short lived. As a result, daily price action formed a bear candle carrying lower high-low, indicating extended breather.

* The lack of follow through strength signifies prolonged consolidation in the broader range of 24850-24200. we believe, ongoing consolidation for help index to form a higher base that would pave the way to resolve higher towards 25200. Hence, focus should be on accumulating quality stock on dips as support base is now revised upward at 24200. Our positive stance is validated by following observations:

* a) Heavy weight sectors to drive next leg of up move: Nifty IT endured its record setting spree over second consecutive week while Bank Nifty bounced after retesting two-month range breakout area (52600). Cumulatively both sector carries 50% weightage in Nifty

* b) Broader market in focus: Ratio chart of Nifty 500 / Nifty 100 recorded breakout from 6 months consolidation, suggesting broader market to outperform going ahead.

* c) Structure: Elongation of rallies followed by slower pace of retracement amid improving market breadth indicates robust price structure. Buying on dips would be the prudent strategy to adopt

* The Nifty midcap index extended gains over fourth consecutive week while Nifty small cap index recorded fresh All Time High last week. The traction in the broader market is backed by improving market breadth as currently, 59% stocks of Nifty 500 universe are trading above 50 days SMA compared to November reading of 35%

* The formation of higher peak and trough makes us confident to revise support base at 24200 levels as it is confluence of:

* a) 61.80% retracement of current rally (23263-24857) at 24250

* b) Friday’s panic low is placed at 24180

Nifty Bank : 52835

Technical Outlook

Day that was :

Bank Nifty extended breather over second consecutive session tracking elevated volatility ahead of US Fed meet outcome . The index lost 1 .39 % to settle the session at 52835 . Meanwhile, Nifty PSU Banking index relatively underperformed the benchmark by losing 1 .82 % .

Technical Outlook :

* The Bank Nifty opened gap -down and gradually inched southward as intraday pullbacks were short lived . The daily price action resulted in the formation of a bearish candle with smaller wicks on both ends, reflecting extended breather amid volatility .

* Going ahead, follow through buying is required for the upward momentum to continue, enabling the index to surpass the past two week’s high of 53888 . A breakout above this level would result into revived traction and open the door for extension of ongoing up move towards lifetime highs of 54400 in coming weeks . In the process, bouts of volatility cannot be ruled out amid US Fed meet outcome . Therefore, any decline from hereon should be capitalized at incremental buying opportunity as key support is placed at 52000 as it is 80 % retracement of current up move (51693 - 53888 )

* Structurally, elongation of rallies followed by slower pace of retracement, exhibits robust price structure that bodes well for extension of ongoing uptrend .

* The PSU bank index failed to build on momentum above Monday’s high and ended the session on a subdued note . However, we believe that the index will hold above the recent swing low of 6825 and gradually establish a higher base, paving the way for a potential recovery

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