Equity benchmarks concluded weekly expiry session on a subdued note following RBI Policy outcome - ICICI Direct
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Nifty : 24117
Technical Outlook
Day that was…
Equity benchmarks concluded weekly expiry session on a subdued note following RBI Policy outcome. Nifty settled Thursday’s session at 24117, down 180 points or 0.7%. Market breadth turned negative with A/D ratio of 1:1.2. Sectorally, pharma outshone while IT, metal, Oil & Gas relatively underperformed
Technical Outlook:
* The index witnessed an elevated volatility wherein Nifty oscillated by 800 points during the session. The daily price action resulted into bear candle carrying lower high-low, indicating extended breather above 20 days EMA amid stock specific action
* The lack of follow through strength above 20 days EMA coupled with Monday’s gap area (24686-24350), signifies stiff resistance at 24350 mark. Only a decisive close above 24350 would indicate pause in downward momentum and open the door for meaningful pullback. Failure to do so would lead to extended correction wherein strong support is placed at 23600. In the process, stock specific action would prevail amid progression of earning season coupled with ongoing global volatility
* On the broader market front, Midcap and small cap indices have bounced after correcting 7% from life highs. We believe, broader market is undergoing healthy retracement after rallying 25% and 28%, respectively (from election low). Hence, focus should be on quality stocks backed by strong earnings
* Structurally, the formation of lower high-low after eight weeks rally indicates pause in upward momentum that makes us revise support base at 23600 as it is 38.2% retracement of past eight weeks up move 21281-25078
Nifty Bank : 50156
Technical Outlook
Day that was :
Nifty Bank closed Thursdays session on a flat note as RBI maintained its statuesquo on rates in policy meeting . Index gained 37 points to close at 50156
Technical Outlook :
* The Index traded choppy and rudderless in the range of 50400 -49900 amid divergent flows and lack of directional bias . In the process index held its rising 100 day ema around 49600 for fourth session amid oversold reading of 11 on daily stochastics . Price action formed high wave candle indicating technical bounce from over sold readings
* Going forward, key resistance is placed now at 51300 levels which is Mondays bearish gap area and value of down ward slopping trendline drawn from life highs . Further, a decisive breach of short term support of 49600 would indicate extended correction in coming sessions towards 48500 which is confluence of a) 61 . 8 % retracement of post election rally and b) value of rising 200 -day ema (48200 )
* Price structure : A) We observe that index is undergoing healthy retracement from overbought readings after 15 % rally . Currently, index has retraced, post election, 21 session rally by 50 % over 22 sessions, indicating corrective nature of decline and would lead into higher bottom formation
* B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current context 7 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 200 -day ema around 48500 levels
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