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Nifty : 19543

Technical Outlook

* The index retreated from key resistance of 19800 on third occasion in last four weeks. Consequently, weekly price action formed a bear candle with small upper shadow, highlighting profit booking at higher levels.

* In the upcoming truncated week, we expect prolongation of consolidation in 19800-19300 range amid rise in volatility owing to escalating geopolitical concerns. However, historical evidences suggest that such short term volatility is transitory in nature and offers incremental buying opportunity over medium term. Thus, we advise to adopt buy on dips strategy in quality stocks backed by strong earnings

* 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 trading above 50 days EMA, indicating shallow nature of correction in turn displaying inherent strength.

* On the macro front, geopolitical worries have led Crude oil prices higher over past two weeks. However, we expect prices to face stiff hurdle in $96-98 band.

* Sectorally, we expect auto, pharma to relatively outperform while BFSI, Metal offer bargain buy opportunity amid oversold conditions

* On the stock front, in large cap we prefer Indusind Bank, LTI Mindtree, Maruti Suzuki, Hero Motocorp, NTPC, Hindalco, Sun Pharma while in midcaps Latentview, Credit access Grameen, South Indian Bank, Delhivery, Sagar Cement, Varroc, KPIL Network 18, Graphite India, Balrampur Chinni are looking good

* The formation of higher peak and trough despite ongoing geopolitical tension signifies robust price structure that makes us confident to retain support base upward at 19300 as it is confluence of 100 days EMA is placed at 19325 coincided with current months low of 19333 

Nifty Bank: 43723

Technical Outlook

* The price action formed bear candle with lower high -low for fifth week indicating continuation of corrective bias . In the process prices approached oversold readings as weekly stochastics reading of 21 , however Index need to sustain above previous session high to indicate pause in downward momentum

* Going forward, 44500 levels remains key hurdle in the short term while immediate key support is placed at three month identical lows around 43500 levels . Only a decisive breach of past three month lows of 43500 would indicate extended decline else consolidation to continue in 43500 -44500 zone

* Structurally, Index is in the process of undergoing a healthy retracement of April to July rally over past thirteen weeks and also discounting various negatives in the process . In the short term, prices may lead south structurally trend remains firm

* Our structural positive view is based on following key observations

* Index has retraced 18week rally (38613 -46369 ) by just 38 . 2 % over 13 weeks indicating inherent strength

* Large 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 backed by earnings

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