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Nifty : 22643

Technical Outlook

Day that was…

Equity benchmark overcame Fridays losses and headed higher on Monday to start the week on optimistic note. The BankNifty index spearheaded the rally leading benchmark Nifty to gain 1% to close at 22643. A/D ratio was almost flattish for the session as broader markets consolidated recent gain

Technical Outlook

* The session started on a positive note, followed by index consolidating in first hour of trade. Strong buying across banking stocks thereafter led the index higher for rest of the session to settle near days high. Price action formed a strong bull candle which surpassed past two session highs. On expected lines, BankNifty outperformed and lifted the index higher

* Our positive stance only gets substantiated by recent price behaviour as dips are attracting elevated buying demand. As we progress through earnings and general election phases, higher high-low formation with strong domestic flows makes us reiterate our positive stance with Nifty target of 23400 by General election outcome with strong support at 21700.

* In the current truncated week, we expect Nifty to challenge life highs of 22800. with key immediate support placed at last week low of 22300. Thus, any temporary breather should be utilised to accumulate quality stock in the ongoing Q4 earning season. Our constructive bias is validated by following observations:

* A) BankNifty/Nifty relative performance chart indicates strong outperformance from BankNifty over next 3-4 months. Since 2008, in all six instances where relative ratio line turned up from cycle low, Bank Nifty outperformed by double digit over three-four months period

* B) Breadth continue to improve as percentage of stocks above 50-day ema strengthened from 55% to 75%, highlighting broader market participation

* C) The India Vix (which gauge the market sentiments) continues to remain at depressed levels

* D) Indian equities have positive correlation with the global peers. The strong setups in key European, US and Japanese market would act as tailwind

* The broader market has staged a strong rebound in current leg of rally as Nifty Midcap and small cap index clocked a new life highs that showcase robust structure of broader market which augurs well for durability of ongoing up move

* Formation of higher peak and trough makes us confident to revise support base at 22300 is based on confluence of:

* a) 50% retracement of recent up move 21778-22655

* b) 50 days rising EMA is placed at 22185

* c) Last week’s low is placed at 22198

Nifty Bank: 49424

Technical Outlook

Day that was…

The Nifty Bank index rallied sharply on Monday to start the week on positive note . Large corporate lenders led the rally amid earnings . Nifty Bank index closed at 49424 , up 2 . 5 % or 1223 points

Technical Outlook

* Index started the session on a positive note led by strong cues and then continued to gain strength led by private lenders first and then well supported by strong rally in PSU banks . Price action thus formed a strong bull candle which pierced through life highs of 49057 , on expected lines, to record new all time high . In the process index gave a strong breakout from almost four months of consolidation phase

* Mondays price action is supported by good breadth and makes our positive stance even stronger . We expect index to eventually head towards 51000 levels over next couple of months while immediate target is placed at psychological mark of 50000 . We expect outperformance of corporate lenders in the process

* Key observation has been that Bank Nifty/Nifty relative performance ratio chart indicates strong outperformance from Bank Nifty over next 3 - 4 months . Since 2008 , in all six instances, whenever relative ratio line turned up from cycle low, Bank Nifty outperformed by 5 % over three -four months period

* We revise key immediate support for Index at 48000 as it is confluence of :

onfluence of :

* Last Fridays low

* Value of rising 20 -day ema at 48001

* 50 % retracement of past six session gains at 48026

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