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Nifty :25061

Technical Outlook

Day that was…

* Equity benchmarks took a breather amid lack of strong directional cues. Nifty settle the day at 25061 down 30 points. Sectorally, all indices closed in red, where, PSU Bank, Realty and Pharma underperformed.

Technical Outlook:

* The index opened the day with a positive gap; however, it faced resistance in the vicinity of 20-day EMA where intraday rallies were sold into. This led to the formation of a small bear candle, signaling breather after Monday’s upmove.

* Index is set to open gap up tracking positive Asian peers amid USJapan trade deal. Key point to highlight is that, over past three sessions index has been consolidating after retesting lower band of rising channel amidst lack of clarity on the development of US bilateral trade agreement. Thereby, we expect prolongation of consolidation amid Q1 earning, with stock specific action. Going ahead, a decisive close above previous week’s high (25255) would open the gate towards 25800 in coming month. In addition to that, Nifty has witnessed positive hidden divergence where price made a higher low and RSI made lower low indicating bounce from current levels. Immediate support is in the vicinity of 24800-24500 zone.

* Structurally, since April intermediate corrections have been limited to 3% while sustaining above its 50 days EMA. In addition to that, over past 16-days index has retraced 61.80% of preceding 11-days 5% up move. Slower pace of retracement indicating robust price structure that bodes well for next leg of up move. Hence, focus should be on accumulating quality stocks on dip backed by strong earnings.

Key Monitorable which will dictate the further course of action:

* All eyes will be on outcome of US-India bilateral trade deal. b) Falling US Dollar index would result into FII's inflow.

* India VIX has extended losses and now approaching April low of 10.2, indicating participants anxiety at lowest level and soon we can see spike in VIX which would result into directional move going ahead

* Structurally, the formation of higher peak and trough while absorbing host of negative news around geo-political issues coupled with absence of US–India trade tariff decision. Further, strong market breadth depict strength as currently 64% stocks of Nifty 500 universe are trading above 200-days SMA compared to last weeks reading of 60% while last month reading was 52%. This signals that the market is building strength for the next leg higher.

* We maintain our support base at 24800-24500 zone for the Nifty which is based on 50% retracement of recent rally (23936-25669) and 20-week EMA.

Nifty Bank : 56756

Technical Outlook

Day that was :

* The Bank Nifty closed on a negative note, closing at 56756 , down 0 .35 % . The Nifty Pvt Bank index outperformed the benchmark closed slightly on a negative note, and ended at 27 ,845 , down 0 .13 % .

Technical Outlook :

* The Bank Nifty faced marginally profit booking after struggling to extend gains above the previous day high . Intraday bounces remained short - lived, culminating in the formation of a bearish candle with a small higher wick, indicating healthy breather within the ongoing uptrend .

* Key point to highlight is that Bank nifty recent price action witnessed a potential shift, with the index forming higher -high -low pattern, signaling resilience and robust price structure . Supportive efforts are emerging in the vicinity of 20 -day EMA indicating index will gradually resolve higher . Since April, intermediate corrections have remained shallow while the index has consistently held above its 50 -day EMA . Moreover, over the past three weeks, the index has retraced 50 % of the preceding 4 .50 % up move seen in the prior three weeks . The slower pace of retracement highlights a robust price structure, which augurs well for the next leg of the uptrend . We expect index to find supportive efforts near 56000 zone which is 38 . 2 % retracement level of its preceding rally and gradually stage a rebound wherein 57500 would act as resistance once closed above it that will open the gates towards 58800 levels in coming quarter which is the implied target of the consolidation from (56098 -53483 ) . Consequently, any dip from current levels could offer fresh buying opportunities .

* Underperforming the benchmark, PSU bank witnessed straight fourth - session of profit booking and closed on a negative note, however we expect index to witnessed a supportive effort in the vicinity of rising trendline resistance which is also backed by a 50 day -EMA key reference, indicating buying demand at lower levels . After breaking out from an eleven -month falling trendline on 19th May, the index has maintained a higher -high -low structure as per Dow -theory on the weekly chart, signaling uptrend is intact . While Bank Nifty trades below ~ 2 . 5 % from its all -time highs, the PSU Bank index remains about ~12 % below its all -time high, presenting a compelling case for a catch -up move . Immediate support on the downside is placed at 6 ,700 , which is the recent swing low and coincides with the 20 -week EMA .

* Structurally, Bank Nifty is undergoing phase -wise expansion, with each rally establishing new price zones of acceptance . Instead of sharp directional moves, the index is progressing through brief consolidations that serve as launchpads for subsequent advances . This transition from volatility -driven swings to range -bound bases suggests increasing market maturity, with demand emerging at higher levels . The narrowing amplitude of corrections indicates that stronger hands are absorbing supply, maintaining trend continuity .

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