IGI Logo

Nifty :23508

Technical Outlook

Day that was…

The equity benchmark index ended the day on a positive note for the fourth consecutive session ahead of the union budget 25, gaining 258 points, (1.11%), settling the day at 23508. The Broader market remained positive with improved A/D ratio of 3:1 signaling outperformance. Sectorally, all sectors were in positive where the beaten down sectors staged a strong recovery such as, Consumer Durable, FMCG, and Realty.

Technical Outlook:

• The Nifty opened on a flat note however, the bulls soon came into action and the index gradually closed higher as intraday pullbacks were bought into. As a result, daily price action formed a sizeable bull candle and witnessed a follow through buying after yesterday’s breakout from falling trendline (drawn connecting the highs of 7th Jan and 24th Jan), indicating follow through strength post falling trend line breakout that helped index to surpass above the immediate hurdle of 23300 ahead of budget

• In today’s eventful session, volatility would remain high as the budget sessions progresses. However, sustenance above 23300 post budget session is key monitorable which would open the door for next leg of up move towards 23700. In the process, 22500 would continue to act as key support.

• Within a structural bull market, secondary correction is a common phenomenon. With current 13% correction, we believe the index has absorbed the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting limited downside going ahead. Hence, better than expected budget would fuel the pullback rally in the market as strong support is placed at 22500 as it aligns with the implied target of the recent consolidation breakdown (24,200–23,300) and coincides with the 50% retracement of the October 2023 to September 2024 rally (18,838–26,277).

• Structurally, since 2002, bull market average corrections have been to the tune of 14% while time wise index has not recorded negative monthly close for more than 3-4 months. With 13% correction already in place we expect index to maintain the same rhythm and staged a strong rebound in coming weeks

• On the broader market front, we witnessed a follow up buying in the Nifty Midcap and Small Cap indices which outperformed the benchmark and staged a strong recovery where smallcap100 bounced from 100- week EMA and 80% retracement mark of the rally from (14966-19716) and Midcap100 bounced from the vicinity of 61.80% retracement mark of the rally from (47246-60925), which is a healthy sign. Meanwhile, the breadth indicator (% of stocks above 50 days SMA of Nifty 500 Universe) has bounced from bearish extreme level of 10. Since covid lows, such an extreme reading leads to short term revers

Nifty Bank : 49587

Technical Outlook

Day that was :

The Bank Nifty closed on a positive note for the fourth consecutive session, settling the day at 49587 , up by 0 .56 % . The Nifty PSU Bank index outperformed the benchmark and closed at 6317 , up by 1 .36 % . Market breadth remained in favor of bulls as A/D ratio was 3 : 1 .

Technical Outlook :

* The Bank Nifty opened Friday’s trading session on a negative note, however buying demand emerged from the lower level, resulting in the index witnessing gradual up - move throughout the day . In the process, the intraday pullbacks were bought into and the daily price action created a bull candle in continuation with the ongoing up - move, closing near the upper end of the 17 day’s consolidation range of 47850 -49650 ahead of the budget day .

* Going ahead, volatility would remain elevated tracking Budget session . However, better than expected budget would help index to resolve above the consolidation range on the upside and open the gates for 51600 mark which is 61 . 8 % retracement of previous fall (53888 -47844 ) .

* Structurally, over past three weeks, the index has been hovering around the long -term rising trendline (drawn adjoining subsequent lows off jun -22 ) amid oversold conditions and the current base formation near the same indicates exhaustion on the downward momentum . The weekly stochastic oscillator witnessed a bullish crossover indicating acceleration to the ongoing pullback .

* In tandem with the benchmark index, the Nifty PSU Bank also resumed the bullish momentum and closed above the previous three session high which resulted into a falling trendline breakout (joining the highs of Dec -24 and Jan -25 ) . Additionally, the index decisively closed above the immediate resistance mark of 6300 , thus opening the gate for the next leg of up -move towards 6720 being 61 . 8 % retracement mark of the previous fall (7248 -5866 ) .

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631