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Nifty : 19512

Technical Outlook

* The daily price action formed a bear candle carrying lower high-low, indicating corrective bias as index failed to sustain above 20 days EMA. In the process, India VIX gained >10%, indicating rise in volatility.

* Going ahead, we expect prolongation of consolidation in the broader range of 19300-19800, as holding above last week’s low of 19300 amid ongoing geopolitical concerns would keep positive options open. Meanwhile, stock specific action likely to continue amid onset of Q2 earning season.Thus, focus should be on accumulating quality stocks amid ongoing global volatility. Our positive bias is based on following observations:

* a) Historically, during secular up move 100 days EMA acts as a strong support. In current scenario as well, buying demand emerged in the vicinity of 100 days EMA

* b) Crude oil will be the key monitorable as pullback in crude is approaching the breakdown area of 3 months rising channel. Thus, decline in crude from higher level would provide impetus for equities

* The formation of higher peak and trough signifies inherent strength that makes us confident to revise support base upward at 19300 as it is confluence of 100 days EMA is placed at 19248 coincided with last week’s panic low of 19333

* Broader markets indices have been undergoing healthy consolidation wherein over past four weeks it retraced less than 50% of preceding 4 weeks’ rally. The slower pace of retracement signifies robust price structure. Thus, dips should be capitalized to accumulate quality stock

Nifty Bank: 43886

Technical Outlook

* The price action for the day formed a bear candle with gap down action (44113 -44360 ) indicating extended consolidation for fourth week in a row and short term volatility

* Going forward, index holding 43300 -43500 despite geopolitical worries could keep pull back options open from over sold zone as it is confluence of a)August - September lows and 100 -day ema . However for any meaningful pull back to materialize index needs to start forming higher high -lows and sustain above key resistance of 45000 levels

* Structurally , Index is undergoing a healthy retracement of entire April -July rally (19 % over 18weeks) in a shallow manner indicating inherent strength

* Our view is backed by following key observations

* Index has retraced 18week rally (38613 -46369 ) by just 38 . 2 % over 11 weeks indicating inherent strength

* PSU banks continue to relatively outperform and could lend some support at lower levels

* Heavy weight private banks including HDFC bank are now oversold and back to their key supports thereby projecting limited downsides

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