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Nifty :24177

Indian equity benchmarks concluded the session on a positive note, despite weak global cues, surge in crude oil prices and rupee depreciation. The Nifty settled the day at 24,177, gaining ~181 points. Broader markets were mixed with an A/D ration of 1:1, with Nifty Midcap eased slightly, declining 0.07% while Smallcap mirrored the benchmark, gaining 0.65%. Sectorally, barring PSUs banks and Consumer durable, all major indices closed higher, with FMCG, Realty and Auto emerging as the primary gainers.

Technical Outlook

* The index started strong and extended its upward trajectory during the first half. However, it witnessed resistance at the 61.8% retracement level (drawn from the prior decline of 24,601 to 23,813). This lack of follow-through strength resulted in late-session profit booking. The daily price action formed a bullish candle with a long upper wick, signaling profit booking from elevated levels.

* Index is likely to witness gap down opening tracking spike in crude oil prices. Going ahead, in the short term, the index is expected to consolidate within a broad range of 23,400 to 24,500. In the process stock-specific activity will continue backed by ongoing corporate earnings season while monitoring geopolitical volatility. A decisive close above the 24,500 mark is essential to trigger the next leg of up move

* We view the current retracement as a healthy consolidation rather than a trend reversal. Investors should utilize dips to accumulate high-quality stocks with strong Q4 earnings as strong support is firmly placed at 23,400, which aligns with the 61.8% Fibonacci retracement of the recent rally (22,182–24,601) and the significant gap area of 23,555–23,15.

Our constructive bias is further validated by following observations:

* The formation of higher peak and trough on the weekly chart signifies rejuvenation of upward momentum.

* The current up move is backed by the improvement in the market breadth as the current reading of % stocks trading above 50- and 200- days SMA has jumped to 75% and 42% compared to last month reading of 15%, signaling broadening of rally that bodes well for durability of ongoing up move.

* We expect broader market to relatively outperform the large caps as the ratio chart of Nifty500 vs Nifty 100 has resolved higher and at the cusp of breaking out of past two years consolidation. Such breakout would result into acceleration in Midcap and small caps outperformance going ahead.

* From a global market perspective, the S&P 500's recent breach of the historic 7,000 level and Nikkei and Kospi’s fresh move towards all-time highs signal robust momentum. We expect the Indian markets to witness catch up activity as it has direct co-relation with the global peers

Key Monitorable:

A.De-escalation of geopolitical conflict

B.Q4 earning season

C.Further decline in Crude, US Dollar Index.

Intraday Rational:

* Trend - Supportive efforts emerging around 20-day EMA, indicating short-term view remains positive

* Levels - Buy around 80% retracement of last 3 days upmove.

Nifty Bank :55404

The Bank Nifty Index settled the volatile sessions on a flat note tracking mixed global cues and settle at 55404 at 0.01%. Nifty PSU Bank relatively underperformed closing flat.

Technical Outlook:

* Index started on a positive note and traded in previous session high low range (56138-55260) indicating consolidation near 20- day EMA . The daily price action resulted into bear candle with upper shadow.

* Index is likely to witness gap down opening tracking weak global cues. Key point to highlight is that Index witnessed strong recovery in first half and pared the gains in last hour of trade. Lack of follow through strength indicate continuation of corrective phase wherein strong support placed around 54600,being 38.2% retracement of entire April rally (49954- 57456). Further, a decisive close above previous session high (56178) would be required to pause the ongoing decline.

* On the weekly charts stochastic oscillator is in overbought territory with a reading of ~83 levels, indicating possibility of near-term breather that would make the markets healthier and set stage for next leg of up

* Nifty PSU Bank relatively underperformed forming lower high lower low close below 20-day EMA indicating breather. Sustainability above last week high will be important for revival in upward momentum.

Intraday Rational:

* Trend- Breather post sharp 15% rally over 13 trading session, indicating temporary pause in upward momentum

* Levels- Sell around 80% of yesterday decline.

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