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Nifty

Technical Outlook

Day that was…

Equity benchmark kick started the week on a positive note tracking firm global cues. The Nifty gained 28 points to settle the session at 20997. The market breadth remained sturdy with A/D ratio of 1.5:1 as broader market relatively outperformed. Sectorally, Metal, FMCG, PSU Bank, Realty outperformed while pharma, Pharma took a breat

Technical Outlook 

The index witnessed a range bound activity wherein Nifty oscillated by 100points range post positive opening. The daily price action resulted into bull candle carrying higher low, indicating continuation of positive bias. In the process, benchmark scaled to a fresh All Time High of 21026.

• The shallow retracement followed by elongated rallies signifies robust price structure that makes us confident to revise target to 21400 in coming weeks. However, over past four sessions, index has been consolidating in a 200 points range after ~1200 points rally seen in seven sessions that would help to cool off the daily and weekly stochastic oscillator from overbought territory. Hence, dips should be capitalized as incremental buying opportunity as immediate support is placed at 20500. Our positive bias is further validated by following observations:

• A) The Banknifty index witnessed faster pace of retracement as it retraced 14 weeks decline in just six weeks, indicating rejuvenation of upward momentum. BFSI carries 35% weightage in the Nifty which would provide impetus for next leg of up move

• B) Declining yields, suppressed Brent crude oil prices and stable currency (INR/USD) along with strong institutional flows would act as tailwinds

• The formation of higher peak and trough along with shallow retracement signifies elevated buying demand that makes us confident to revise support base at 20500 as its is confluence of 38.2% retracement of past three weeks rally (19768-21006) coincided with last week’s low of 20508

Nifty Bank

Technical Outlook

Day that was :

The Nifty Bank index inched up albeit off the highs . Nifty Bank settled at 47314 , up 52 points or 0 .11 % on Monday Technical Outlook :

* The price action on Monday resulted in a shooting star like candle indicating profit taking at higher levels in large cap banks after a sharp runup in preceding week

* Going forward, we expect prices to move towards 48000 in a non -linear fashion as some consolidation along the way would be a healthy sign . . Target of 4800 is based on 138 . 2 % retracement of entire decline (46369 -42105 ) . Stick to buy on dips strategy with key support now being revised at 45900 being 38 . 2 % retracement of past week rally

* Structurally, index posted faster retracement of entire July -October decline in just four weeks highlighting robust price structure . Further participation of both private/public sector banks make the rally more dependable in terms of having further legs . We expect PSU banks to relatively outperform over medium term as the PSU bank index has given a multi year breakout

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