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Nifty : 19811

Technical Outlook

* The index witnessed a gap up opening (19731-19843), but failed to witnessed follow through strength. Consequently stock specific action resulted into small bear candle carrying higher high-low, indicating continuation of positive bias.

* Going ahead, sustainability above 19800 over next couple of sessions amid global uncertainty due to geopolitical concerns would open the door for extended pullback. Thus, any dip from hereon should be capitalized as an incremental buying opportunity. In the process, stock specific action likely to continue amid ongoing Q2 earning season.

* Since CY20 low, on six out of nine occasions mean reversion towards 50 days EMA along with strong market breadth (where >50% stocks of Nifty 500 are trading above 50) offered fresh entry opportunity. Despite current market volatility, >60% of stocks are currently trading above 50 days EMA, indicating shallow nature of correction across mid and small cap space signifying inherent strength. Both indices have undergone healthy consolidation wherein over past five weeks it retraced less than 50% of preceding 4 weeks’ rally. The slower pace of retracement signifies robust price structure.

* The formation of higher high and low on the weekly chart signifies conclusion of corrective bias that makes us confident to retain support base upward at 19300 as it is confluence of 100 days EMA is placed at 19296 coincided with current months low of 19333The index witnessed a gap up opening (19731-19843), but failed to witnessed follow through strength. Consequently stock specific action resulted into small bear candle carrying higher high-low, indicating continuation of positive bias.

* Going ahead, sustainability above 19800 over next couple of sessions amid global uncertainty due to geopolitical concerns would open the door for extended pullback. Thus, any dip from hereon should be capitalized as an incremental buying opportunity. In the process, stock specific action likely to continue amid ongoing Q2 earning season.

* Since CY20 low, on six out of nine occasions mean reversion towards 50 days EMA along with strong market breadth (where >50% stocks of Nifty 500 are trading above 50) offered fresh entry opportunity. Despite current market volatility, >60% of stocks are currently trading above 50 days EMA, indicating shallow nature of correction across mid and small cap space signifying inherent strength. Both indices have undergone healthy consolidation wherein over past five weeks it retraced less than 50% of preceding 4 weeks’ rally. The slower pace of retracement signifies robust price structure.

* The formation of higher high and low on the weekly chart signifies conclusion of corrective bias that makes us confident to retain support base upward at 19300 as it is confluence of 100 days EMA is placed at 19296 coincided with current months low of 19333

Nifty Bank: 44409

Technical Outlook

* The price action formed higher high low on daily chart indicating supportive efforts and follow through strength above Mondays high

* Going forward, we expect index to hold key support of 43500 -43800 and extend a pull back towards 44800 - 45000 which is past three weeks high and immediate hurdle . Sustaining above 45000 would lead to acceleration of upward momentum

* Structurally, Index has undergone a healthy retracement over past twelve weeks making overall trend healthy

* Our positive view is based on following key observations

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

* Private banks have undergone decent price/time correction and placed at oversold readings

* PSU bank index has given a breakout from decade long consolidation indicating structural turnaround 

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