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Nifty : 24055

Technical Outlook.

Day that was…

Equity benchmarks witnessed sharp decline tracking weak global cues. Nifty settled Monday’s session at 24055, down 662 points or 2.7%. Market breadth turned negative with A/D ratio of 1:7 as broader market reactively underperformed. Sectorally, all major indices ended in red weighed down by metal, financials, IT, auto

Technical Outlook:

* The index witnessed a gap down opening and gradually inched southward as the day progressed since intraday pullbacks were short lived. As a result, daily price action formed a sizable bear candle carrying lower high-low, indicating extended breather after recent sharp up move. Global volatility weighed on sentiments leading most major equity indices to decline

* The formation of lower high-low amid elevated global volatility coupled with spike in India VIX signifies prolongation of corrective bias. Thus, only a decisive close above Monday’s high of 24350 would confirm pause in downward momentum. In the process, stock specific action would prevail amid progression of earning season wherein strong support is placed at 23600

* On the broader market front, Midcap and small cap indices have rallied 25% and 28% from election low. As a result, both indices are approaching price parity of Oct23-Feb24 rally, indicating possibility of temporary breather at life highs can not be ruled out. Hence, stock specific action should be in focus amid ongoing earning season

* Structurally, the formation of higher peak and trough signifies buying demand at elevated support base that makes us revise support base at 23600 as it is 38.2% retracement of past eight weeks up move 21281-25078

Nifty Bank : 50092

Technical Outlook

Day that was :

Nifty Bank declined on Monday amid global equity sell off and concerns around recession in US . Index closed down by1258 points or 2 .45 % at 50092 . Both private and PSU banking stocks witnessed extended profit taking

Technical Outlook :

* The Index started the session with a gap down (50750 - 51350 ) and then continued to decline led by panic in global markets . Price action formed a bear candle with small lower shadow, thus maintaining its negative bias . In the process index almost approached the immediate support of 49600 in Mondays session . However, index need to start forming higher high – low sequence to indicate pause in downward momentum, supported by stability in global markets

* Going forward, key resistance is placed now at 51300 levels which is Mondays bearish gap area and value of down ward slopping trendline . Further a decisive breach of short term support of 49600 would indicate extended correction in coming sessions towards 48500 which is confluence of a) 61 . 8 % retracement of post election rally and b) value of rising 200 -day ema (48200 )

* 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 21 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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