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Nifty :23432

Technical Outlook

Week that was…

Equity benchmarks snapped two weeks up move and settled volatile week on a negative note tracking rising US dollar index leading to FII's continuous sell-off coupled with depreciating Rupee, Nifty dipped 2.4% to settle the week at 23432. Broader market underperformed by losing ~6%. Sectorally, IT was the only gainer, while PSU Bank, Realty, and Energy emerged as the worst-performing sectors, contributing to the decline

Technical Outlook:

* The Index started the week on a negative note and inched southward leading to breach of three weeks low. As a result, weekly price action resulted into sizable bear candle that engulfed past two weeks real body, indicating corrective bias while hovering in the vicinity of 52 weeks EMA

* In today’s session, Nifty is likely to witness gap down opening tracking weak global cues. However, after initial decline, holding November lows of 23270 (on a closing basis) would be the key monitorable amid oversold conditions as past four weeks >1400 points decline hauled daily stochastic in oversold territory (placed at 14). Further, a decisive close above 23600 for next couple of days would confirm pause in downward momentum and open the door for meaningful pullback towards 23900. On the contrary, only a decisive close below 23300 would result into extended correction towards 22800 as it is price parity of Dec-Jan decline (24857-23460) projected from Jan-25 high of 24226.

* Meanwhile, we expect volatility to remain elevated tracking Q3FY25 earning season as many heavy weight companies are coming out with their earnings (carrying >20% weightage in Nifty), anxiety around new policy measures from Trump government, and Budget expectation that would have bearing on the market sentiment

* On the global macro front, Dollar index is approaching its key hurdle of 112 amid overbought conditions. However, we believe this up move in Dollar index would cool off once the anxiety around Trump policies settles down which would provide cushion to emerging markets.

* On the broader market front, the breach of past 3 weeks low resulted into extended correction in the broader market towards its 200 days EMA which has been held since April 2023. Thus, for a meaningful pullback to materialise, index need to decisively close above last week’s high along with improving market breadth. Failure to do so would lead to extended correction

Nifty Bank : 48734

Technical Outlook

Week that was :

After a couple of weeks consolidation and range -bound movement, the Bank Nifty experienced a sharp decline, ending the week on a negative note at 48734 , down by 4 .35 % . Meanwhile, Nifty PSU Bank index relatively underperformed the benchmark by closing negative by 7 .97 % , ending the week with a bearish bias

Technical Outlook :

* The Bank Nifty witnessed, selling pressure throughout the week amid global volatility . The price action of the week formed a sizeable bear candle, where it breached key support of 52 weeks EMA coupled with swing low of 49700 on the downside leading to extended correction, contrary to our expectation .

* In today’s session index is likely to witness gap down opening tracking weak global cues . Going ahead, bias would remain corrective as long as index maintain lower high -low formation . Only a decisive close above the psychological mark of 50000 for two -three sessions would confirm the pause in downward momentum that would eventually open the door for meaningful pullback, else extended correction where next support is placed at 48300 as it is confluence of lower band of two years rising channel coincided with 50 % retracement of Oct -23 to Sept -24 rally (42105 -54467), while Dec -23 close is also placed at 48293

* Key point to highlight is that, past four weeks 10 % decline has hauled weekly stochastic oscillator in oversold territory (placed at 11 ) . Hence, traders are advised to refrain from creating aggressive short position as possibility of pullback activity cannot be ruled out amid oversold conditions .

* Mirroring the benchmark index, the PSU Bank index extended the losses and witnessed a sharp selling to form a sizeable bear candle, closing the week on a negative note . Going ahead, 50 % retracement at 5800 of previous up - move(3528 -8053 ) will act as an immediate support mark, while a higher high -low formation would be required for a meaningful pullback to materialize