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Nifty : 21349

Technical Outlook

• The weekly price action has formed a small bear candle, indicating breather after seven consecutive weeks rally. The shadows on either side indicates, elevated volatility.

• In the upcoming truncated week, we expect Nifty to consolidate with a positive bias in the broader range of 21600-20800 amid stock specific action which will make market healthy after 15% rally seen over past two months. Eventually, we expect index to resolve above ongoing higher base formation and gradually head towards 22000 in January 2024. In the process, bouts of volatility owing to global development and monthly expiry week can not be ruled out. Hence, dips should not be construed as negative instead it should be capitalised as incremental buying opportunity in quality stocks as strong support is placed at 20800. Our positive bias is further validated by following observations:

• A) Breather after faster pace of retracement in Bank Nifty while revived buying demand in Nifty IT index signifies inherent strength.

• B) Global market setups becomes more supportive as US and European indices are coming out of two years of hiatus

• C) Declining yields, and stable currency (INR/USD) along with strong institutional flows would act as tailwinds

• Sectorally, we remain positive on Financials, Capital Goods & Infra, PSU, Metal, Energy while IT provide favourable risk reward setup

• On the stock front, in large cap we prefer Reliance, SBI, TCS, GAIL, Hindalco, PNB while in midcaps Arvind fashion, Hind Oil Exploration, Graphite, Engineers India, Bank of India, CESC, BEML, Auro Pharma, Birla Soft, Chambal Fertiliser, Elgi Equipment, HFCL, Vguard, are looking good

• The formation of higher peak and trough along with shallow retracement signifies elevated buying demand that makes us confident to retain support base at 20800 as its is confluence of 38.2% retracement of past three weeks rally (19768-21593) coincided with last week’s low of 20770 and 20 days EMA placed at 20813

Nifty Bank: 47492

Technical Outlook

• The price action for the week formed an inside day candle as prices failed to make new highs while declines during the week attracted buying support near last week low of 46900 on expected lines .

• In the coming week as we enter truncated expiry week, we expect index to consolidate in 46800 -48200 range amid positive bias and form a higher base . A decisive move above 48200 would indicate resumption of up move towards 49000

• Meanwhile, we maintain short term support at 46800 being identical lows of two weeks which we expect to hold ahead of next weeks monthly expiry

• Structurally, index posted faster retracement of entire July -October decline in just four weeks highlighting robust price structure . Further participation of both private/public sector banks make the rally more dependable in terms of having further legs . We expect PSU banks to relatively outperform over medium term as the PSU bank index has given a multi year breakout

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