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Nifty : 24857

Technical Outlook

Day that was…

Equity benchmarks extended breather at life highs. The Nifty settled Tuesday’s session at 24857. Market breadth remained positive with A/D ratio of 1.5:1 as broader market relatively outperformed as Nifty midcap and small cap relatively outperformed. Sectorally, consumer durables, auto remained at forefront while FMCG, took a breather

Technical Outlook:

* The index witnessed a range bound activity wherein Nifty oscillated in 180 points range as Nifty has been facing resistance around psychological mark of 25000 over second consecutive session. The daily price action resulted into inside bar, indicating breather after recent sharp up move amid stock specific action. In the process, Nifty Midcap and small cap recorded fresh All Time High

* The temporary breather at life highs after recent sharp up move, highlights healthy retracement. However, broader structure remains strong that makes us revised target to 25200 in coming weeks. In the process, 24400 would act as immediate support. Thus, buying would be the prudent strategy to adopt. Our positive bias is further validated by following observations: * A) The Bank Nifty has witnessed supportive efforts from 50 days EMA while Nifty index witnessed follow through strength post multiyear cup & handle breakout. Tracking in Banking and IT space bodes well for next leg of up move as cumulatively both indices carry >50% weightage in Nifty

* B)Net of Advance/Decline (Nifty500) bottomed out from its bearish extreme reading (-450) around Union Budget and made a sharp reversal

* C)India Vix which is a gauge of market sentiment, crashed 18% for the week as anxiety settled post Budget event, indicating that market participants are not expecting a significant volatility

* D) In US major sector rotation has taken place over past few weeks ahead of US Fed policy in coming sessions. Dow Jones and Russell 2000 small cap index both have given a significant breakout indicating that rally in US is broadening now

* Structurally, the formation of higher peak and trough signifies buying demand at elevated support base that makes us revise support base at 24400 as it is confluence of:

* A) 61.8% retracement of last week’s up moves 24074-24861

* B) 20 days EMA is placed at 24340

Nifty Bank : 51499

Technical Outlook

Day that was :

Nifty Bank ended the choppy trading session almost unchanged on Tuesday ahead of monthly derivative expiry . Index gained 93 points or 0 . 2 % to settle at 51499

Technical Outlook :

* The Index commenced the session on a flat note and then gradually moved higher helped by large private banks . However, last hour volatility led index to surrender intraday gains completely amid selling pressure near psychological mark and short term resistance of 52000 mark . Days price action formed another small bodied candle with large upper shadow indicating continuation of consolidation and stiff hurdle at 52000 mark . For a meaningful recovery, index need to sustain above 52000 levels . Meanwhile, we expect index to undergo consolidation in the range of 49600 -52000 levels

* Going forward, key resistance is placed at 52000 being past two session highs while key support is placed at 49600 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema

* Price structure : We observe that index is undergoing healthy retracement from overbought readings after 15 % rally . Currently, index has retraced post election 21 session rally by just 38 . 2 % over seventeen session period indicating corrective nature of decline . Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current decline 5 . 5 % correction is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 100 -day ema around 49600 levels

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