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Nifty : 24572

Technical Outlook

Day that was…

Equity benchmarks started the week on a positive note tracking firm global cues. Nifty settled Monday’s session at 24580, up 40 points. Market breadth remained positive with A/D ratio of 2.6:1 as broader market performed in tandem with the benchmark. Sectorally, Oil & Gas, Metal, PSU Bank outshone while auto, financials relatively underperformed

Technical Outlook:

* Index started the session on a positive note and subsequently oscillated in 100 points range. As a result, daily price action formed a small bear candle carrying higher high-low, indicating positive bias amid stock specific action

* The formation of higher peak and trough post consolidation breakout above 24400 along with multi sector participation signifies revived upward momentum that makes us confident to believe, index would resolve higher and gradually challenge the life highs of 25000 in coming weeks. Thus, any dip from hereon should be capitalized to accumulate quality stocks as strong support is placed at 24100. Our positive bias is further validated by following observations:

* A) Since beginning of CY24, Index has maintained the rhythm of not correcting for more than 2 weeks wherein intermediate corrections have been limited to the tune of 5%. Key takeaway is that post such price/time correction Nifty has tendency to surpass life highs in each of the four instances.

* B) Volatility gauge has reverted to pre-election levels signaling that not much volatility is expected in near term by participants

* C) Global equity market regained upward momentum as S&P 500 index logged breakout from four weeks falling trend line that confirms resumption of uptrend

* Profit taking in broader markets continued as percentage of stocks above 50-day ema are now at 49% against 60% last week. This ratio usually bottoms out below 35%. In current context, mid and small caps may consolidate in coming week before next leg of rally emerge

* The formation of higher high-low on the weekly chart makes us revise support base at 24100 as it is confluence of 50 days EMA coincided with last week’s low

Nifty Bank : 50368

Technical Outlook

Week that was :

Nifty Bank consolidated in Monday before closing the session on a marginally negative note . Index lost 148 points or 0 .30 % to close at 50368

Technical Outlook :

* The Index started session on Monday on positive note, however then traded lack lustre for rest of the session and closed lower . Price action formed a small bear candle as index failed to sustain above 50 -day ema (50800 ) and remained enclosed within Fridays strong bull candle .

* Going ahead, follow through strength above past two week’s high (50800 ) would lead to extended pullback in coming week towards 51800 . Meanwhile, medium term support for index is placed at 49650 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema c) past two weeks low

* 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 29 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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