Index opened weak and traded in a narrow 105-point range - ICICI Direct
Nifty :24378
Indian equity benchmarks took a breather today, snapping a three-session winning streak amid cautious geopolitical cues. The Nifty 50 settled at 24,378, declining 198 points. However, market breadth remained in favour of the bulls with an (A/D) ratio of 1.4:1. Broader markets relatively outperformed the benchmark, as the Nifty Midcap and Smallcap indices climbed 0.20% and 1%, respectively. Sectorally, FMCG, Chemicals, Metals, Realty emerged as a top gainer while IT, BFSI and Auto were the top laggards
Technical Outlook
* The index started the day on a weak note and oscillated within a narrow 105-point range for the rest of the session. The daily price action formed a bearish candle with a small upper shadow, signaling a temporary pause.
* Index is likely to open with a gap-down amid escalated geopolitical tensions in the Middle East and rising crude oil prices. Key point to highlight, the index has witnessed a sharp rally of over 11% over the past 13 trading sessions, its strongest pullback since May 2025. Following this rapid upmove, the market is now taking a breather with healthy consolidation above its 50-day EMA (24,200) that would set the stage for the next leg of upmove towards 24800 being its 200-day EMA.
* Meanwhile, the Stochastic Oscillator on both daily and weekly timeframes has entered overbought territory with a reading of ~80 and ~92, indicating possibility of profit-booking in near-term. however broader structure remains positive and intact. • Thereby any such "cool-off" should not be construed as a negative but rather as a healthy consolidation of recent gains. Hence any decline from current level should be used to accumulate quality stocks supported by strong Q4 earnings as strong support is placed at 23700, being 38.2% retracement of current upmove (22182-24601).
* From a global market perspective, the S&P 500's recent breach of the historic 7,000 level and the Nasdaq’s push to all-time highs signal robust momentum. We expect the Indian markets to mirror this trend with significant 'catch-up' activity.
* In the process, volatility would remain elevated on the back of geopolitical development as well as onset of earning season. Hence, we expect stock specific activity to remain in focus.
Our constructive bias is further validated by following observations:
1.Mirroring the historical volatility of the Russia/Ukraine conflict, the index is repeating a similar "war-induced" pattern. Recent corrections have arrested near the 11% mark, followed by a resilient one-month rally of approximately 9%, suggesting that markets have priced in the geopolitical risks and are entering a recovery phase.
2.Market breadth has seen a significant improvement, indicating broadbased participation rather than a narrow rally. The % of stocks trading above their 50-day SMA has jumped to 76% (up from 15% last month), while those above their 200-day SMA have increased to 42%, signaling that mid and long-term trends are turning bullish across various sectors
Key Monitorable:
A.Q4 earning season
B.Further decline in Crude, US Dollar Index.
Intraday Rational:
* Trend – Breather post sharp 11% rally over 13 trading session, indicating temporary pause in upward momentum
* Levels - Sell around 38.2% retracement of yesterday decline.
Nifty Bank :57124
The Bank Nifty Index ended the day on a negative note. BankNifty settle the day at 57124 down 0.45%
Technical Outlook:
• Index started the day on a negative note and rebounded after taking support at 61.8% retracement of previous day upmove but surrendered the gains in last hour of trade. The daily price action resulted into Inside bar within previous session high-low range indicating breather after 3 days up move.
• Key point to highlight is that Index has been sustaining above its 200-day EMA (56700) for second day, indicating revival of upward momentum. We believe index to resume its upward momentum and head towards 57800 in the coming weeks being previous support will now act as resistance (change of polarity principle) • Index has rallied 15% from 2 nd April low of 49950 which has pushed momentum stochastic oscillator in daily and weekly time-frame into overbought condition with a reading of ~84 and ~91, indicating possibility of near-term breather that would set stage for next leg of up move. Hence any decline from current level should be used to accumulate quality banking stocks backed by strong Q4 earnings as strong support is now placed around 55800 being 10-day EMA coinciding with last Fridays low. Key monitorable will be Banking heavy weights companies reporting their results.
• On the broader space, the Nifty PSU Bank relatively outperformed the benchmark and closed marginally positive. Forming higher high higher low. Index is consolidating above its short term 20-day EMA, indicating buying demand at elevated support base. A sustain and close above 100-day EMA would accelerate the next leg of upmove towards 9100 being 61.8% Retracement of Feb-April26 decline.
Intraday Rational:
* Trend- Breather post sharp 15% rally over 13 trading session, indicating temporary pause in upward momentum
* Levels- Sell around 38.2% retracement of yesterday decline.
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