Index opens flat, finds support near prior low; trades in ~450-pt range - ICICI Direct
Nifty :26178
Technical Outlook
Day that was…
The equity benchmark extended its consolidation for a second consecutive session, closing at 26,178, down 0.30%. Market breadth remained negative, with the A/D ratio at 1:2, as both the Nifty Midcap and Smallcap indices moved in tandem with the benchmark. Sectorally, Oil & Gas emerged as the sole laggard, while most other sectors ended flat to marginally higher. BFSI, Pharma, and IT outperformed and provided stability to the benchmark.
Technical Outlook:
* The index opened on a flat note and remained range-bound throughout the session, oscillating within a narrow 140-point band. The daily chart formed a Doji candle with long upper and lower shadows, highlighting heightened intraday volatility.
* Notably, the decline was largely driven by profit booking in couple of Nifty heavyweight stocks. However, active broader participation prevented any meaningful weakness in the market with Bank nifty has relatively outperformed the benchmark, highlighting resilient market structure. This price behavior suggests a pause within the prevailing uptrend rather than any signs of trend reversal that will make market healthy ahead of Union budget and onset of Q3 earning season
* Looking ahead, we maintain a constructive stance on the index, as a follow through strength above 26300 (on a closing basis) would open the door for target of 26,800 zone in coming weeks, supported by rotational sectoral leadership and improving risk appetite
* In the process, bouts of volatility owing to global development and onset of earning season would present incremental buying opportunity wherein strong support is placed at 25700 being lower band of ongoing consolidation range.
Our constructive bias is further validated by following observations:
1. Bank Nifty: Four weeks decline entirely retraced back in just a single week, propelling index to clock a fresh All Time High
2. The ratio chart of MSCI India vs MSCI World has once again bounced from cyclical lows which has been held since CY21, indicating relative outperformance against global equities going ahead
3. Broadening of rally: The rally has broadened significantly over past two weeks with 53% of the stocks are trading above their 50 days SMA compared to 27% 2 weeks ago
Key Monitorable for the next week:
a) Q3-FY26 earnings b) US-India Trade Deal c) Brent Crude Oil has remained soft and trading near lower band of consolidation. Breakdown below 58 would result into extended correction
Intraday Rational:
* Trend- Higher high-low structure within rising channel (25700- 26300)
* Levels: Buy near last Wednesday gap area(26130-26100) and 20- day EMA
Nifty Bank : 60118
Technical Outlook
Day that was:
Bank Nifty ended the day on a marginally positive note, at 60108 (0.1%). Nifty PSU Bank Index relatively outperformed gaining 0.5%.
Technical Outlook:
* Index opened on a flat note and witnessed supportive efforts from previous session low and traded within a ~450 points narrow range through out rest of its session. Daily price action formed Bull candle with upper and lower shadow, indicating elevated volatility.
* Key point to highlight is that, Bank Nifty has relatively outperformed the benchmark and recouped most of those losses from its previous session. Broader banking space remained resilient barring couple of stocks, as strong business updates for the December quarter lifted sentiment around the banking sector ahead of the earnings season beginning January 12, indicating healthy consolidation.
* Going ahead we maintain our positive outlook and expect Bank Nifty to accelerate its upward momentum and head towards 61500. Hence any dips from current levels should be viewed as buying opportunity as key support is placed at 59400 being 20-day EMA coinciding with 61.8% retracement of current up move.
* Structurally, Index has retraced its entire 4-weeks decline in a single week, while clocking a fresh all-time high, indicating faster pace of recovery.
* Nifty PSU Bank Index continues to outperform after witnessed breakout from 4 weeks trading range (8650-8063)and now Going ahead we expect it to head towards 9200 levels being measuring implication of range breakout in coming weeks.
Intraday Rational:
* Trend- Higher high-low structure within rising channel (25700-26300)
* Levels: Buy near 61.8% retracement of last 4 days up move(59587-60535)
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