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Nifty : 19716

Technical Outlook

* The Nifty made a smart recovery from early lows of 19554 as buying demand emerged in the vicinity of rising 50-day ema as prices approached oversold zone after 3% decline from life highs. In the process, index formed higher high for the first time in seven sessions indicating pause in downward momentum and attempt to bounce back.

* Going forward, we expect Nifty to hold strong support around 19500 followed by healthy consolidation in the broad range of 19500-20000 in current expiry week. Use dips as buying opportunity

* Structurally, ongoing decline/volatility is transitory in nature and part of the healthy retracement of three week rally (19223-20222) and should not be construed as negative rather an incremental opportunity to ride the uptrend

* Broader markets represented by Midcap and Small cap indices are currently undergoing healthy consolidation post >40% rally in past six months. In a secular bull market secondary correction is a common phenomenon wherein historically 8-10% corrections provided incremental buying opportunity.

* Key support base at 19600-19500 is a confluence of:

* a) 61.8% retracement of current up move (19223- 20222), at 19605

* b) Presence of rising 50-day ema at 19550 and

* C) value of rising trendline connecting key swing lows of June and August 2023

* Breadth: Percentage of stocks above 50-dma sustained ~70% despite consolidation over past two weeks indicating shallow nature of correction and sign of overall strength

Nifty Bank: 44588

Technical Outlook
* The price action on Tuesday resulted in Hammer like bullish reversal candle as buying demand emerged near key support of 44200 -44000 zone as prices approached oversold zone . In coming sessions follow through strength above Wednesdays high would be important to expect meaningful reversal

* We expect index to hold key support zone s to emerge in 44000 -44200 zone and gradually head towards short term hurdle of 45200

* Structurally, Index has retraced past four week rally by 61 . 8 % over seven sessions leading daily stochastic close to oversold readings (reading of 14 )

* Our view is backed by following key observations

* On higher degree, index is consolidating in a broad range of 43600 -46300 since early August as it is digesting strong rally from March lows of 38613

* 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 downside

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