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Nifty : 23992

Technical Outlook

Day that was…

Equity benchmarks extended correction over third consecutive session. Nifty settled Tuesday’s session at 23992, down 63 points or 0.26%. Market breadth remained negative with A/D ratio of 1:1.7 as broader market relatively underperformed the bench. Sectorally, all major indices ended in red weighed down by metal, financials, IT, auto

Technical Outlook:

* The index failed to capitalise initial gap up opening and eventually closed the session on a subdued note. Daily price action resulted into bear candle, indicating extended correction

* The lack of follow through strength above Monday’s gap area (24686-24350) signifies near term weakness. Thus, we believe bias would remain corrective as long as Nifty trades below 24350. In the process, stock specific action would prevail amid progression of earning season wherein strong support is placed at 23600

* On the broader market front, Midcap and small cap indices have rallied 25% and 28%, respectively (from election low). As a result, both indices have reacted after approaching price parity of Oct23-Feb24 rally, indicating possibility of extended breather. Hence, stock specific action should be in focus amid ongoing earning season

* 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 : 49748

Technical Outlook

Day that was :

Nifty Bank extended its losing streak for third session as global volatility continued to weigh on sentiments . Index closed down by 343 points or 0 . 7 % at 49748 . Apart from banks NBFC also remained under pressure

Technical Outlook :

* The Index extended its decline with lower high low as it failed to sustain opening gains amid profit taking in heavyweight PSU and private banks . In the process index approached the immediate support of 49600 amid oversold reading of 13 on daily stochastics . However, to indicate pause in downward momentum, index need to start forming higher high – low sequence and sustain above past two session identical highs of 50700 levels

* Going forward, key resistance is placed now at 51300 levels which is Mondays bearish gap area and value of down ward slopping trendline . 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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