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Nifty : 22420

Technical Outlook

Day that was…

Equity benchmark recovered last week’s losses and concluded the volatile week on a positive note. The Nifty gained 1.2% to settle the week at 22420. The broader market relatively outperformed the benchmark by gaining 4%, respectively. Sectorally, all major indices ended in green led by financials, metal, realty

Technical Outlook

* The buying demand from lower band of rising channel helped index to recover last week’s losses and settle the week above 22400 mark. Consequently, weekly price action formed a bull candle carrying higher high-low, indicating resumption of upward momentum after two week’s breather. In the process, broader market Nifty Midcap, Small cap indices staged a strong rebound and clocked a fresh All Time High. Key point to highlight is that DII’s have shown strength by absorbing the FII’s sell-off seen during the month of April-24 while discounting host of global volatility owing to geo-political concerns

* We believe, Indian equities remain on strong footing that makes us reiterate our positive stance with Nifty target of 23400 by General election outcome with strong support at 21700.

* In the up coming truncated week, we expect Nifty to challenge life highs of 22800. The formation of higher peak and trough signifies buying demand at elevated support base that makes us revise immediate support upward at 22100. Thus, any temporary breather should be utilise to accumulate quality stock in the ongoing Q4 earning season. Our constructive bias is validated by following observations:

* A) BankNifty/Nifty relative performance chart indicates strong outperformance from BankNifty over next 3-4 months. Since 2008, in all six instances where relative ratio line turned up from cycle low, Bank Nifty outperformed by double digit over three-four months period

* B) Breadth continue to improve as percentage of stocks above 50-day ema strengthened from 55% to 75%, highlighting broader market participation

* C) The India Vix (which gauge the market sentiments) has plunged ~20% in last week suggesting receding market risk amongst market participants that in turns bodes well for resolving above ongoing consolidation in Nifty

* D) Indian equities have positive correlation with the global peers. The US market is forming a higher base above its All Time High while FTSE has clocked a fresh All Time High that bodes well for continuation of uptrend in domestic market

*  The broader market has staged a strong rebound in current leg of rally as Nifty Midcap and small cap index clocked a new life highs that showcase robust structure of broader market which augurs well for durability of ongoing up move

* Formation of higher peak and trough makes us confident to revise support base at 22100 is based on confluence of:

* a) 61.8% retracement of recent up move 21778-22625

* b) 50 days EMA is placed at 22167

* c) Last week’s low is placed at 22198

Nifty Bank: 48201

Technical Outlook

Week that was…

The Nifty Bank index gained 1 . 3 % during last week despite steep decline in Kotak Bank post results . PSU banking space outperformed with 6 .44 % gain for the week . Nifty Bank index closed the week at 48201 , up 1 .32 % or 627 points

Technical Outlook

* Index witnessed volatility amid earnings and global events during the wee, however recouped the losses to close higher, in the process holding 20 -day ema . Weekly price action formed a long legged Doji carrying higher high -low indicating buying demand at lower levels while some hesitation to sustain above the bearish gap of 15th April (48500 ) Bias remains positive in the coming truncated week with last week’s low of 47500 being key immediate support

* We maintain our positive stance for coming week and expect Bank nifty to challenge its life highs of 49000 levels with outperformance from corporate banks

* Key observation has been that Bank Nifty/Nifty relative performance ratio chart indicates strong outperformance from Bank Nifty over next 3 - 4 months . Since 2008 , in all six instances, whenever relative ratio line turned up from cycle low, Bank Nifty outperformed by 5 % over three -four months period

* We revise key immediate support for Index at 47500 as it is confluence of :

* Last week lows

*  Value of rising 20 -day ema at 47851

* 50 % retracement of past five session gains at 47629

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