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Nifty : 24770

Technical Outlook

Day that was…

Equity benchmarks endured its northbound journey over fifth session in a row. Nifty settled the session at 24770, up 71 points or 0.3%. Market breadth remained positive with A/D ratio of 1.9:1 as small cap index relatively outperformed. Sectorally, FMCG, Consumer Durable, Pharma remained at forefront while private banks, realty took a breather

Technical Outlook:

* The fag end buying demand helped index to maintain higher highlow formation and settle the session on a positive note. As a result, daily price action formed a bull candle carrying higher high-low, indicating continuation of positive bias.

* The formation of higher high-low amid sectoral rotation helped index to maintain positive momentum that bodes well for next leg of up move towards psychological mark of 25000 in coming weeks. Thus, any dip from hereon should be capitalized to accumulate quality stocks as strong support is placed at 24400. Our positive bias is further validated by following observations:

* A) Since beginning of CY24, Index has maintained the rhythm of not correcting for more than 2 weeks wherein intermediate corrections have been limited to the tune of 5%. Key takeaway is that post such price/time correction Nifty has tendency to surpass life highs in each of the four instances

* B) Bank Nifty has formed a strong base formation above 100 days EMA. Going ahead, a decisive close above past two weeks doji like candle (50800) would lead to extended pullback towards 51800 in coming weeks

* C) Global equity market regained upward momentum as S&P 500 index regained upward momentum after logging breakout from four weeks falling trend line that confirms resumption of uptrend

* On the broader market front, formation of higher high-low on the weekly chart indicates pause in downward momentum. Going ahead, we expect broader market to undergo healthy consolidation wherein stock specific action would prevail. Thus, focus should be on quality stocks with strong earnings 

* The formation of higher high-low on the weekly chart makes us revise support base at 24400 as it is confluence of 20 days EMA coincided with 61.8% retracement of ongoing up move (24100- 24788

Nifty Bank : 50685

Technical Outlook

Day that was :

Nifty Bank closed Wednesdays session on a flat note amid weekly expiry . Index declined 117 points or 0 .23 % to close at 50685

Technical Outlook :

*  The Index started session on a subdued note and remained in negative territory as it oscillated in mere 300 points range (50700 -50400 ) for rest of the session amid weekly expiry flows . Price action for the day formed inside bar indicating pause near higher band of past eleven session range (49650 -50800), that also coincide with 50 - day ema .

* Going ahead, follow through strength above past two week’s high (50800 ) would lead to extended pullback in coming week towards 51800 . Meanwhile, medium term support for index is placed at 49650 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema c) past two weeks low

* 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 31 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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