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Nifty : 24586

Technical Outlook

Day that was…

Equity benchmarks started the truncated week on a positive note tracking firm global cues. Nifty gained 85 points to settle the session at 24587. Market breadth remained strong as broader market relatively outperformed the benchmark. Sectorally, barring IT, all other indices ended in green led by auto, oil & gas and PSU Banks outperformed

Technical Outlook:

* The index started the session on a positive note and gradually recorded fresh All Time High of 24635. The daily price action formed a Doji like candle carrying higher high-low, indicating continuation of uptrend amid stock specific action

* The formation of higher high-low while sustaining above 10 days EMA highlights inherent strength that bodes well for gradual movement towards 24800 in coming weeks. However, bouts of volatility amid overbought condition cannot be ruled out as weekly stochastic approached at 96 levels. Thus, temporary breather should not be considered as negative instead dips would offer incremental buying opportunity wherein immediate support is placed at 24100. We expect focus to be on sectoral churns and stock specific action as Q1FY25 earnings season picks up from coming week. Our positive bias is corroborated with following observations:

* A) The faster pace of retracement helped IT index to resolve out of 10 quarters cup & handle pattern, following rate cut expectations in US. Given the significant weightage of IT sector in Nifty, this could act as a cushion going forward

* B) Strong domestic fund flow, firm global setups and Budget expectations along with monsoon progression domestically would be key factors influencing market direction

* On the broader market front, Nifty midcap, small cap indices have gained 22% and 28%, respectively which hauled weekly stochastic oscillator in overbought territory (placed at 96). Thus, we recommend to be choosy in this segment as retracement of rally cannot be ruled out and could lead to minor profit booking

* Structurally, the formation of higher peak and trough supported by improving market breadth makes us revise support base upward at 24100 as it is confluence of:

* A) 38.2% retracement of past three weeks up moves 23350-24592

* B) Last week’s low of 24140 coincided with 20 days EMA

Nifty Bank: 52455

Technical Outlook

Day that was :

Nifty Bank index gained on Monday led by PSU banking stocks as progression of monsoon helped sentiments to boost despite above expectation inflation print . Index closed the session at 52455 , up 177 points or 0 .34 %

Technical Outlook :

* The index commenced session on a muted note and then traded in a 52300 -52600 zone for rest of the session, resulting in an inside candle that indicates lack of follow through strength above 52500 levels and extended consolidation above rising 21 -day ema . Over past seven sessions, index has failed to sustain above previous session high . Hence sustainability above 52500 would indicate pause in downward bias and a bounce back towards upper end of consolidation range at 53500

* Going forward, expect index to hold immediate support and last week low of 52000 and extend ongoing consolidation in 52000 -53500 band . Only a decisive breach of 52000 would be a sign of extended profit taking

* PSU banking stocks have witnessed some value buying on Monday after underperforming for few weeks . WE believe higher bottom formation is made by PSU banking stocks ahead of earnings and eventually expected to head higher

* We revise short term support to last week’s low of 52000 which also coincide with rising 21 -day ema

* Price structure : We observe that index is maintaining its higher high -low formation on multiple time frames and remain in steady uptrend and short term declines are attracting buying support . Hence consolidation in the short term will help index to undergo higher base formation and work out of overbought readings

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