Equity benchmarks settled the weekly expiry session on a positive note - ICICI Direct
Nifty :23205
Technical Outlook
Day that was…
Equity benchmarks settled the weekly expiry session on a positive note. The Nifty gained 50 points to settle at 23,205. However, the broader market outperformed the benchmark, with an improved advance-decline ratio of 1.25:1. Sectorally, Consumer Durables, IT, and Pharma were the outperformers, whereas Oil & Gas, Private Banks, and Nifty Bank were subdued for the day.
Technical Outlook:
• The index witnessed a gap-down opening (23,155–23,128). However, it swiftly reversed the losses due to selective accumulation in heavyweights during the first half, followed by a range-bound phase until the close. In the process, the daily price action resulted in a follow-through buying of the yesterday’s hammer candle, closing above the previous session’s high with a green body, indicating strength at lower levels with a supportive action from the long-term rising trendline intact (drawn adjoining subsequent lows of Mar-Oct 2023).
• The index is currently hovering around the 52-week EMA amid oversold conditions. However, for a meaningful pullback to materialize, the Nifty needs to decisively close above the 23,300 mark over the next couple of sessions, which would pave the way for an extended pullback towards the 24,200 levels. Failure to achieve this would likely prolong the corrective bias, with strong support placed at 22,500. Going forward, we anticipate that concerns around new Trump policies will abate in the next couple of sessions, thereby fueling upward momentum in equities.
• On the structural front, the past four months’ 12% decline has dragged the weekly and monthly stochastic oscillators into oversold territory (placed at 10 and 15, respectively). The index has now posted a positive close, followed by a follow-through buying after a positive divergence in the RSI and today RSI generated a fresh buy cross over on the daily timeframe, suggesting an impending pullback. Thus, the focus should remain on accumulating fundamentally strong, quality stocks in a staggered manner, particularly those with earnings surpassing market expectations.
• On the downside, critical support is placed at 22,500, which aligns with the implied target of the recent consolidation breakdown (24,200–23,300) and coincides with the 50% retracement of the October 2023 to September 2024 rally (18,838–26,277).
• On the broader market front, following yesterday’s sell-off in the Nifty Midcap and Small Cap indices, both staged a robust comeback rally, with the midcap segment displaying the strongest momentum as it closed above the previous session’s high. Both indices are currently hovering near their 52-week EMA while sustaining above last week’s lows, signaling a extended consolidation phase. We believe the indices are undergoing a secondary correction within the broader bull market—a pattern observed on three occasions since the Covid-19 lows, where the price-wise average correction has been approximately 17%, while the time-wise corrections have typically not exceeded 4–5 months. In the current scenario, with 15% correction already in place, we expect the indices to adhere to this rhythm and stage a recovery in the coming weeks
Nifty Bank : 48589
Technical Outlook
Day that was :
The Bank Nifty witnessed rangebound action where it settled the day on a subdued note at 48589 , down by 0 .28 % . Meanwhile, Nifty PVT Bank index mirrored the benchmarks move by closing on a negative note at 23870 , down by 0 .40 % .
Technical Outlook :
• The index observed a lackluster day and traded within a narrow range of 400 points . As a result, daily price action formed a small bear candle, indicating breather at the lower band of consolidation range .
• The key point to highlight is that, the index is consolidating in the vicinity of lower band of rising channel, in a broader range of 47898 -49798 since past 11 trading sessions amid oversold conditions, thus indicating impending pullback in coming sessions . Once this broader range is breached on the upside the index is likely to head towards the mark of 51600 , which is 61 . 8 % retracement mark of the previous fall (53888 -47898 ) .
• Structurally, the Bank Nifty is trading at lower band of multi year rising channel with the weekly stochastic oscillator is placed at 9 , indicating pullback activity at lower level cannot be ruled out .
• Mirroring the benchmark index, PSU bank index witnessed a rangebound activity and closed the day on a flat note . The daily price action remained within the previous day candle thus indicating breather . Going ahead, a decisive close above the falling trendline (drawn adjoining Dec -24 highs) placed around 6500 will fuel the next leg of up move, while on the downside the 6000 mark, which is 80 % retracement of the recent up -move (5866 -6480 ) will provide immediate support .
