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Nifty : 22716

Technical Outlook

Day that was ..

The equity benchmark witnessed a highly volatile expiry session, with Nifty settling at 22,716, down around 64 points.

Technical Outlook :

• The index opened on a weak note and extended its decline towards the Key support zone of 22,550–22,600 zone before witnessing buying demand emerging from the rising trendline support, which helped the index recover 145 points from the day’s low. The index subsequently formed a hammer candlestick on the daily timeframe, highlighting lower-level buying interest.

• The sharp intraday recovery from the day’s low, despite elevated volatility, indicates that selling pressure was absorbed around the key support zone, with the index managing to close well off its intraday lows. Going ahead, a decisive close above previous session high (22753) would be the first sign of pause in downward momentum.

• With past eight weeks 9% correction index has approached crucial support zone amid oversold conditions that warrant for selling exhaustion in coming weeks, based on following technical factors:

• Over the last two years, Nifty has witnessed two major corrective phases (from Sep-24, and Jan-26) where declines were arrested around the 80% Fibonacci retracement of the preceding rally. The ongoing correction marks the third such instance, with the index once again testing the 80% retracement zone of its prevailing up move (22182-24774). This level coincides with the rising trendline support and the 200-week EMA ~22400, creating a strong support confluence.

• Bank Nifty, which carries around 35% weightage in Nifty, has also formed a hammer around its 80% Fibonacci retracement zone of June rally (53027- 58706). The simultaneous defence of a major retracement level in the banking benchmark provides additional confirmation of the support structure in the broader market.

• Around 82% of Nifty 500 stocks are trading below their 50-day SMA, indicating significant deterioration in market breadth. Such an extreme breadth reading suggests that the broader market has reached a stretched zone, increasing the scope for a technical rebound.

• The recent seven-week correction aligns with historical patterns. Past two decades data reveals that there have been only five instances where the Nifty experienced a correction lasting more than six consecutive weeks, with the maximum duration being seven weeks during the 2008 and 2020 market cycles. In all such cases, momentum oscillators bounced after approaching their bearish extremes, offering medium-term buying opportunities.

• Daily RSI(~27) is exhibiting positive divergence, with the momentum indicator failing to make a corresponding fresh low as Nifty tested lower price levels. This along with oversold placement of weekly stochastic oscillator indicates narrowing downward momentum and supports the possibility of an intermediate technical pullback.

• For a meaningful pullback to materialise, Nifty needs to reclaim and close above the previous week’s high at 23,080, a level it has failed to surpass for the past seven weeks. A close above this threshold would signal an intermediate recoveryarnings.

Intraday Rational :

Trend – Hammer candle at key support zone of 22600

Levels – Buy around Tuesday’s lo

Nifty Bank : 54260

Technical Outlook

Day that was :

Bank Nifty ended the monthly expiry session on negative note, at 54260 down 0.39% on back of weak global cues.

Technical Outlook :

• Bank Nifty started the day with gap-down opening thereafter found supportive efforts from 80% retracement of May-June rally(52783-58706. The daily price action formed a Hammer candlestick indicating buying demand from lower levels.

• Going ahead a decisive close above previous session high (54405) would be a prerequisite to pause the ongoing corrective move. Failure to do so would result into extended correction wherein strong support is placed around crucial support area of 53300 levels being 61.80% retracement of Apr-Jun rally (49955- 58706).

• On the upside, a sustained move above 55,300–55,400 could strengthen the recovery momentum and open the way toward 56000 being 61.8% retracement of current decline(56996-54437).

• Among oscillators, Stochastics is placed at 12 levels rebounding from oversold territory indicating impending pullback.

• The PSU Bank Index formed bear candle with lower high lower low indicating extended correction. Going ahead, support is placed at the lower band of past five months consolidation (9095-7809). While oversold placement of daily and weekly stochastic oscillator warrant for selling exhaustion in coming weeks.

• Intraday Rational :

• Trend - Hammer candle at key retracement support

• Levels: Buy around Tuesday’s low.

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