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Nifty :22912

Indian equity benchmark saw a significant rebound post yesterday’s sharp sell-off, tracking ease in geopolitical tension and cool-off in crude oil prices. Market breadth turned positive with an A/D ratio of 3:1. Broader markets relatively outperformed the benchmark with both Nifty Mid and smallcap gaining ~2.50% respectively. Sectorally, all major indices closed in green with BFSI, Auto and Consumer durable emerging as top gainers

Technical Outlook:

* Index open with a positive gap-up and witnessed supportive efforts in the vicinity of 61.8% retracement of previous session’s range (22620). The daily price action has resulted in a small bodied bullish candle, carrying higher high-low formation in daily time frame, indicating buying demand from oversold territory.

* Index is set to open with positive gap-up on back of geopolitical relief and cool off in crude oil prices. Key point to highlight is that despite intermediate pullback index continues to face stiff resistance around its 10-day EMA at 23,350, which also coincides with the 61.8% retracement of the recent decline (23,850–22,470). A decisive close above this zone would mark the first sign of a near-term trend reversal that could open the door for a pullback towards 23,800 being it previous swing low dated.

* Importantly, on set of US-Iran war index has corrected 11% that has hauled a daily, weekly and monthly stochastic readings into extreme oversold territory, a zone that has historically coincided with exhaustion of selling pressure and impending mean reversion. However, intermittent bouts of volatility cannot be ruled out, with key support placed near the 22500 being Monday’s panic low.

Following observations makes us believe markets are at Capitulatory levels offers incremental buying opportunity

* Historical evidence suggests that corrections during geopolitical phases typically mature around ~11% over ~4 weeks and are often followed by >25% returns over the subsequent 3-6 months. In the current instance, Nifty has already corrected ~11% over three weeks, indicating proximity to a potential time-price maturity zone near 22,500.

* Further reinforcing this view, market breadth has deteriorated to extreme levels, with only ~16% and ~20% of Nifty 500 constituents trading above their 50 and 200 DMAs, respectively, while Net A/D near ~470 has historically aligned with capitulation phases. Such breadth washouts have consistently preceded durable intermediate bottoms, typically paving the way for ~20–25% rallies over the next 6–12 months.

Key Monitorable:

* De-escalation of geopolitical tension

* Cool off in Crude oil prices

Intraday Rational:

*Trend - over past 16 sessions index has corrected ~2700 points that has hauled a daily, weekly and monthly stochastic readings into extreme oversold territory, indicating impending pullback.

*Levels - Post gap-up opening buy near 50% retracement measuring from previous session close.

Nifty Bank :52606

The index concluded the session at 52,605, a sharp rise of 1,170 points (2.3%) tracking de-escalation. The Nifty PSU Bank Index relatively underperformed gaining 1.8%.

Technical Outlook:

* The Index opened with gap-up action and thereafter intraday pullback were bought into around 61.8% retracement level(51950)indicating supportive efforts at lower levels. As a result, daily price action resulted in to bull candle with higher high-low formation, indicating supportive efforts near key retracement level.

* Index is likely to open with a positive gap-up tracking positive global cues. Structurally Since March 2022,Index has been trading in upward rising channel(51000). In current scenario also Index has witnessed a sharp reversal from its lower band of rising channel, signaling buying demand emerging around its key long-term support.

* Going ahead, sustaining above the key support threshold of 51300 (Monday’s panic low) amid ongoing geopolitical tension would keep the possibility of a pullback options open towards 54,400 being gap resistance dated 20th March 2026.

• Further, the daily and weekly stochastic oscillator is placed in extreme oversold territory (reading ~14 and ~6), a zone historically associated with exhaustion of selling pressure and scope for a mean-reverting bounce. This suggests that a relief rally cannot be ruled out, and aggressive short positioning at current levels may not be prudent.

* On the broader space, the Nifty PSU Bank closed up 1.50% to settle at 8357. Index is currently hovering around 200-day EMA that coincides with its former breakout zone of 8100 levels now turning as a support as per change of polarity concept, indicating healthy consolidation near key support.

Intraday Rational:

*Trend- buying from lower levels, indicating supportive efforts emerging from oversold condition

*Levels- Post gap-up opening buy near 38.2% retracement measuring from previous session close

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