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Nifty :23155

Technical Outlook

Day that was…

Equity benchmarks settled Wednesday’s session on a positive note tracking positive global cues. The Nifty gained 130 points to settle at 23,155. However, the broader market underperformed the benchmark, with an A/D ratio of 1:2.5. Sectorally, IT, Pharma and Financial Services were the leaders whereas, Realty, PSU Bank and Consumer Durable, were the most laggards for the day.

Technical Outlook:

* Index witnessed a gap-up opening (23,025–23,099). However, initial up move got fizzled out as index drifted lower. The fag end buying demand from last sessions low 22976 coupled with Q3FY25 earning of banking heavyweight HDFC Bank helped index to recoup intraday losses and settle the session near day’s high. In the process, Nifty defended 23000 marks over second consecutive session on a closing basis. Consequently, daily price action resulted into a hammer like candle that confined within Tuesday’s sizable bear candle, signaling supportive efforts from long-term rising trend line (drawn adjoining subsequent lows of Mar-Oct 2023)

* The index is currently hovering around 52 weeks EMA amid oversold conditions. However, for a meaningful pullback to materialise, Nifty need to decisively close above 23300 mark over next couple of sessions that would open the door for extended pull back towards 24200 levels. Failure to do so would lead to continuation of corrective bias wherein strong support is placed at 22500. Going head, we believe anxiety around Trump policies would settle down in next couple of sessions which would fuel the upward momentum in equities.

* On the structural front past four months 12% decline hauled weekly/monthly stochastic oscillator in oversold territory (placed at 9/15 respectively), and index witnessed positive close after positive divergence in RSI on daily time frame, indicating impending pullback. Hence, focus should be on accumulating quality stocks in a staggered manner where earnings have been better than expected

* 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, with the Nifty Midcap and Small Cap indices are hovering in the vicinity of 52 weeks EMA while sustaining above last week’s low signaling prolonged consolidation. We believe the index is undergoing secondary correction in a bull market which we have observed on 3 occasions since Covid lows, where price-wise average correction has been to the tune of 17% while time-wise such correction not lasted for 4-5 months. In current scenario with 15% already in place. Thereby, we expect index to maintain the same rhythm and stage a bounce in coming weeks.

Nifty Bank : 48724

Technical Outlook

Day that was :

The Bank Nifty maintained its volatility from the previous session where it settled the day on a positive note at 48724 , up 0 .32 % . Meanwhile, Nifty PVT Bank index outperformed the benchmarks move lead by HDFC Bank, thus closing on a positive note at 23966 , up by 0 .40 %

Technical Outlook :

* The index opened gap -up but soon extended the selling pressure from the previous session, breaking Tuesday’s low of 48430 in the first half . However, in the second half the supportive efforts emerged from the lower levels driven by Q3FY25 result of HDFC Bank, leading to a strong recovery that trimmed intraday losses . The index ultimately closed on a positive note, forming a long -legged Doji candlestick pattern, indicating selling exhaustion .

* Going ahead, the index needs to sustain above the mark of 49800 (on a closing basis for couple of sessions), which represents the previous breakdown zone coinciding with the 52 -week EMA, which will pave a path for an extended pullback . However, failure to do so will result into prolongation of ongoing corrective bias where the next support is placed at 46800 being 80 % retracement of previous up -move(46077 -54467 ) .

* The key point to highlight is that, the Bank Nifty is trading at lower band of multi year rising channel amid oversold conditions as the weekly stochastic oscillator is placed at 10 , indicating impending pullback .

* In tandem with the benchmark index, PSU bank index continued the selling pressure from Tuesday’s trading session . However, supportive effort emerged from the vicinity of 61 . 8 % retracement of recent up -move (5688 - 6480), which helped the index recover more than 50 % of its intraday losses . Going ahead, a decisive close above the falling trendline 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 .

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