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Nifty : 24010

Technical Outlook

Day that was…

Equity benchmarks extended gains over fourth consecutive week and recorded New Highs. Consequently, Nifty posted strongest gain of CY24 in June and settled the month at 24010, up 6.5%. Broader market performed in tandem with the benchmark. Sectorally, Oil & Gas, IT, financials outperformed while realty, metal took a breather

Technical Outlook:

*  In line with our view, Nifty resolved higher and surpassed our target of 23800. Consequently, weekly price action resulted into sizable bull candle carrying higher high, indicating continuation of uptrend

*  Going ahead, Nifty would consolidate in the broader range of 24400-23600 with a positive bias wherein stock specific action would prevail. However, 14% rally (off Election outcome day low) which has hauled daily and weekly stochastic oscillator in overbought territory (placed at 89 and 95, respectively). Thus, temporary breather should not be construed as negative instead buying dips would be the prudent strategy to adopt as strong support is placed at 23600

*  In the coming month, markets will look for further direction from Union Budget announcements, progression of Monsoon and inflation expectations and Q1FY25 earnings. From the seasonality perspective, July has produced positive returns in 80% occasions over past two decades and similar probability of positive returns is observed even in past five election years spanning two decades wherein budget related expectations tend to weigh on sentiments. Average returns for July has been >2%

*  Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us revise support base at 23600 as it is 10 days EMA coincided with 61.8% retracement of past four sessions up move

Nifty Bank: 52342

Technical Outlook

Week that was: Nifty Bank index continued its winning streak for seventh week in a row to record new highs led by Private banks. Index closed at 52342, down 0.9% or 469 points on Friday

Technical Outlook:

*  The index settled lower on Friday amid some profit taking as 15% rally over past three weeks led prices to overbought reading, both on daily and weekly time frame. Price action resulted in a bear candle with lower high-low indicating slow down in momentum on expected lines

*  Going forward, we expect index to retrace recent gains and consolidate in the range of 51000-53500 amid positive bias. Hence strategy should be to buy dips while avoiding aggression at higher levels

*  PSU banking stocks have witnessed good profit taking/consolidation over few weeks and could garner buying demand over next few sessions from daily oversold readings

*  Meanwhile, we expect index to hold 51000 levels as it is confluence of last week low and value of rising 20-day ema (50928)

*  Price structure: Index has held its rising 52-week EMA on numerous occasions since COVID and more recently on election outcome day. We believe major bottom has been made at 46077. We also observe that index is maintaining its higher high-low formation on multiple time frames and remain in steady uptrend. Important point to note is that PSU banks are undergoing healthy higher base formation in the meanwhile while maintaining their positive price structure from medium term perspective

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