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Nifty :23739

Technical Outlook

Day that was…

Indian equity benchmark concluded the Tuesday’s Sensex expiry session on a positive note, and settled the day at 23739, up by 1.62% for the day. Fii’s for the first time after 23 trading session turned positive wherein, they bought 809 crores in cash. The market breadth remained positive with improved A/D ratio of 2.25:1. Sectorally, today’s move was lead by PSU Bank, Financial Services, and Private Bank where it outperformed the broader market and after budget session FMCG took breather.

Technical Outlook:

* The Nifty witnessed gap up opening (22,361–23,509) and witnessed initial blip amid global volatility. However, supportive efforts from lower levels helped Nifty to stage a strong recovery making higher high-low to close decisively above budget session high of 23650 marks. As a result, index reclaimed 200-Day EMA for the first time since 8th January 2025. As a result, the daily price action formed a sizeable bull candle, indicating revival in upward momentum.

* The rejuvenation of upward momentum backed by traction in heavy weights augurs well for continuation of upward momentum towards 24000 in coming weeks which is in the proximity of 38.2% retracement of the previous fall (26277-22786). Key point to highlight is that, the Bank Nifty has logged a resolute breakout from three weeks base formation, indicating resumption of uptrend. We believe, the extended pullback in Bank Nifty would drive Nifty higher (as it carries ~32% weightage in Nifty). In the process, elevated volatility to prevail as we sail through the Q3FY25 earnings season coupled with upcoming RBI Policy. Hence, buying on dips in quality stocks which are backed by strong earnings would be the prudent strategy to adopt as key support is placed at 23200.

* Historically we have observed that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, the index has approached price and time wise correction. Structurally, since 2002, bull market average corrections have been to the tune of 14% while time wise index has not recorded negative monthly close for more than 3-4 months. Over past four months index has corrected 13% while absorbing the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting impending pullback.

* Meanwhile, the formation of higher high after six weeks corrective phase and close above budget sessions high, indicating shift in momentum that makes us revise support base at 23200 as it is confluence of 61.80% retracement of recent up move (22786-23762) coincided with current week’s low of 23222.

* On the market breadth front, the percentage of stocks above 50 days SMA (within Nifty 500 Universe) has improved from bearish extreme level of 10 last week to 20, meanwhile weekly stochastic oscillator gave a positive cross over reviving from extreme over sold zone below 20, signaling renewed trend

Nifty Bank : 50158

Technical Outlook

Day that was

The Bank Nifty witnessed a stupendous rally ahead of RBI’s Monitory Policy, gaining 947 points to close the session at 50158 , up by 1 .93 % . The Nifty PSU Banking index outperformed the benchmark move and closed at 6265 , up by 2 .41 % . The breadth was in favor of bulls as 10 out of 12 stocks closed on a positive note .

Technical Outlook :

* The Bank Nifty witnessed a gap -up opening and gradually moved higher throughout the day, where intraday pullback were bought into . In the process the price action created a sizeable bull candle indicating continuation of the bullish momentum .

* On expected line, the Bank Nifty witnessed a breakout from the three -week base formation around the lower band of 2 years rising channel and closed above the budget day high, indicating revival in the upward momentum . Thus, making us believe, that the index will continue to resolve higher and move towards the mark of 51600 being 61 . 8 % retracement of previous fall (53888 -47844 ) . In the process, the mark of 48700 shall provide immediate support and any dip witnessed hereon should be capitalized as a buying opportunity in quality stock in a staggered manner .

* Structurally, after 12 % correction the Bank Nifty bounced from the lower end of the long -term rising trendline amid oversold condition, indicating a pause in the downward momentum . The change in market breadth observed in the current week suggests that a short -term bottom is in place and the mark of 48700 will act as an immediate support, being 61 . 8 % retracement mark of the recent up -move (47844 -50009 ) .

* In tandem with the benchmark index, the Nifty PVT Bank index opened gap -up and breached the 21 days consolidation on the upside, creating a sizeable bull candle . The daily RSI indicator witnessed a falling trendline breakout, indicating acceleration of up -move . Moving ahead, the next level of resistance is placed at 25250 which is the upper end of the falling channel formed adjoining the moves of Sep -24 & Dec - 24 .

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