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Nifty :25776

Technical Outlook

Day that was… Equity benchmark extended gains over third session in a row as a landmark India-US trade announcement boosted the market sentiment. Nifty gained 48 points to settle the session at 25776. Market breadth remained sturdy with an A/D ratio of 2:1 backed by strong traction in midcaps and smallcaps. Sectorally, Oil & Gas, Consumer Durables, Metal & Auto remained in limelight while IT seen biggest single day decline since Covid tracking weakness in US tech stocks on concern around an Anthropic AI tool.

Technical Outlook:

* Index recovered initial decline and then majorly oscillated in 25800- 25680 zone throughout the day. The daily price action formed a high wave candle while sustaining above its 50 days EMA, indicating breather after last session’s sharp up move

* The rejuvenation of uptrend on the back of India-US Trade deal has strengthened the investors confidence, leading to improvement in the market breadth leading to bounce in Midcap and small caps. In addition to that the faster pace of retracement (past four-weeks decline was retraced entirely within a single week), which has witnessed for the first time in the past one and a half years, indicating a sign of a structural improvement. We believe, the index is well-positioned to extend the ongoing up trend and gradually retest its all-time high of 26,350 in the coming weeks.

* In the process, bouts of volatility ahead of RBI policy and global developments would offer incremental buying opportunity in quality stocks that are backed by strong earnings, wherein 25,000-25,200 zone is expected to evolve into a strong demand area, as it coincides with the 80% retracement of the recent up-move (24,571-26,341).

* On the broader market front, Nifty midcap once again defended 52 weeks EMA over last nine months while Small cap index witnessed supportive efforts from lower band falling channel. The improving market breadth would result into broadening of the ongoing rally.

* Market breadth has been witnessing improvement, as the percentage of stocks trading above their 50 days SMA has bounced from bearish extremes to ~40% levels while percentage of stocks above 200-day SMA within the Nifty 500 universe enhanced to 38%. Historically, such contractions in breadth have preceded durable market bottoms, with extreme bearish readings near 15% marking inflection points in the past. Our positive stance is further validated by following observations:

* Historical analysis of the past three decades, indicates that post- Budget Nifty has delivered an average return of around 10% over the subsequent three months, reinforcing a constructive medium-term

outlook.

* Since the post-Covid lows, intermediate corrections on four distinct occasions have found strong footing in the vicinity of the 20-month EMA, each instance followed by a ~20% advance over the subsequent five to six months. The current 20-month EMA is placed around 24,300, closely aligning with the August swing low of 24,338, thereby reinforcing this zone as a strong structural support going ahead

Intraday Rational:

* Trend-Stochastic bullish crossover from oversold territory, indicating breather • Levels- Buy around 80% retracement of previous day upmove (25712- 25910)

Nifty Bank :60238

Day that was: Bank Nifty ended the session on a marginally positive note at 60238, up 0.3%. The Nifty PSU Bank relatively outperformed advancing 0.7% respectively.

Technical Outlook:

* The Index opened on negative note however buying demand emerged from the previous session gap area (58687-59793) indicating supportive efforts at elevated support base. On the daily chart, the price action resulted into an inside bar, indicating breather after a previous session sharp up move.

* We believe overall structural bias remains positive. Going ahead, we expect index to sustain above its prior swing high of 60,400 and gradually extend the upward momentum towards 61000 in coming weeks as the sentiment remains overwhelmingly positive on the back of the trade deal. We expect, the index to continue its upward trajectory within a well-defined broader structural framework.

* Hence, any corrective dips from current levels should be viewed as buying opportunities. A strong demand zone is placed around 58,500, which aligns with the 80% retracement of the recent upmove.

* Meanwhile, the Nifty PSU Bank Index also formed a bull candle Inside previous day high-low range and close above its 20-day EMA, reinforcing near-term strength. Going ahead, the index appears well positioned to challenge the 9,170 level in the coming weeks

Intraday Rational:

* Trend- Rebounded from former resistance now turned as support as per change of polarity principal. • Levels -Buy around 80% retracement of previous day upmove(60074-60589)

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