Index opened on positive note but failed to sustain at higher levels and breached previous session low - ICICI Direct
Nifty : 24073
Technical Outlook
Day that was ..
• Indian benchmark indices extended breather over sixth session in a row amid lack of clarity on the geopolitical development and settled Thursday’s session on a flat note at 24,072. Sector-wise Consumer Durables, IT, Auto Outshone while financials taken a breather.
Technical Outlook :
• The Nifty continued to trade in narrow range while sustaining above its 20 days EMA(24040). As a result, the daily price action resulted into inside bar, indicating prolonged consolidation amid stock specific action
• Key point to highlight is that, past six session price activity is confined within a contacting triangle. However, it is important to highlight that despite revived geopolitical uncertainty resulting into spike in crude oil prices, index has managed to defend its short term 50 days EMA which has been held over past four weeks. The sustenance above 50 days EMA indicates that negativities around geopolitical uncertainties are getting priced in. Therefore, a decisive close above upper band of contracting triangle (24200) would confirm resumption of up move towards swing high of 24600.
• In case of, heightened volatility amid further spike in crude oil prices may result into breach of 20 days EMA. In such a scenario possibility of extended correction cannot be ruled out wherein strong support is placed around 23600 as it is 61.8% retracement of June-July rally (23072-24530) coinciding with the gap area seen during 15th June. Hence, the strategy should focus on accumulating high-quality stocks with strong earnings visibility on dips.
• Broader Market Resilience: the Nifty Midcap index reclaimed its alltime high after a six-week hiatus, while the Smallcap index is now just 2% away from its peak. This broader market strength is backed by solid participation: the percentage of stocks trading above their 200-day SMA (within the Nifty 500 universe) has improved to 53% (up from 43% during the prior market peak in MAY).
• US inflation eased more than anticipated in June. In addition to that better-than-expected PPI data has bolstered market expectations for a softer monetary policy outlook from the Federal Reserve that in turn bodes well for equities
Key Monitorable :
a) Any positive development on geopolitical front and resultant cool off in crude oil prices b) Q1FY27 earnings
Intraday Rational :
• Trend – Over the past three session, index is consolidating in a narrow range (24000-24250), indicating breather
• Levels – Sell around yesterday high.
Nifty Bank : 57582
Technical Outlook
Day that was : Bank Nifty Index ended the day on marginally negative note at 57582 amid lack of clarity on the geopolitical development .
Te chnical Outlook :
• Index opened on positive note but failed to sustain at higher levels and breached previous session low. Consequently, the daily price action resulted into bear candle with lower high lower low indicating extended consolidation.
• Over past one week despite geopolitical uncertainty, Index managed to hold 20 days EMA placed around 57400 that reaffirms support at short term moving average. Past 4 weeks Index has been trading in range (58700-56500) above cluster of moving averages indicating healthy consolidation which has set the stage to gradually head towards swing high of 58700 in coming weeks.
• Key point to highlight is that on daily charts Index has generated golden crossover where 50-day EMA has crossed above 200-day EMA structural improvement which would gradually surpass 58700 & unlock the next leg of upmove towards medium term.
• Index has seen slower pace of retracement wherein 3 weeks rally its has retraced less than 38.2% this makes us retain revise support upwards at 56500 levels being 61.8% retracement of recent up move.
• PSU Bank Index is seen taking breather above 52-week EMA, thereby reaffirming strong base at 8100 levels. Going ahead follow through strength above last weeks high would set the stage towards 8500.
Intraday Rational :
• Trend - The index has consolidated near the 20-day EMA over the last 5 sessions. This points to a likely base formation, maintaining the short-term bullish bias.
• Levels : Buy around 61.8% retracement of last 5 days range
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