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Nifty : 24812

Technical Outlook

Day that was…

* Indian equity benchmarks closed on a flat note ahead of FOMC meet. The Nifty settled at 24828 down 41 points. Market breadth was in favor of declines, with an A/D ratio of 1:2 where broader markets underperformed. Sectorally, IT, Metal and Healthcare underperformed whereas, Consumer Durable, Nifty PVT Bank and Auto outperformed.

Technical Outlook:

* Despite initial up move, profit booking emerged in the vicinity of previous sessions high and the index traded within narrow range. This led to the formation of bear candle with upper wick, signaling breather. Key point to highlight is that, past four sessions lackluster move is accompanied by below-average volumes, and today’s daily trading volumes continued the same trend with sub-90k crores volumes while the average volumes is 1.13 lac crores, indicating, lack of broader market participation.

* Going ahead, we expect volatility to remain elevated tracking geopolitical issues and spike in crude oil prices which is hovering near $77 levels. However, current sustenance above 20-day EMA despite geopolitical worries is backed by strong domestic inflows indicating, inherent strength. Hence, any de-escalation of geopolitical worries coupled with cool off in crude oil prices and US Fed policy would help index to resolve above upper band of consolidation placed at 25200 and sustaining above it will lead it towards 25500 in coming weeks. Meanwhile, 24500 would continue to act as key support.

* In the last four decades there have been six major geopolitical escalations. On each occasion it formed major bottom once anxiety around the event settled down. Investing in such panic reactions with long term mind set has been rewarding as index has witnessed double digit returns in subsequent three months. In the current scenario, post the kneejerk reaction, we believe market would stabilise. Hence, we advise dips should be capitalised to build quality portfolios from medium to long term perspective.

* Structurally, the elongation of rallies followed by shallow correction is a perfect recipe of bull market. In current scenario, over past 24 sessions index has retraced merely 23.6% of preceding 25 sessions 16% up move. Slower pace of retracement indicating robust price structure that bodes well for next leg of up move

* On the broader market front, Nifty midcap is undergoing healthy retracement after 28% rally which should be used as buying opportunity as it has not corrected >6% since April low, while on the weekly chart it has not closed below its previous week’s low. In current scenario, despite ongoing volatility, midcap index has been maintaining the same rhythm. Further, the ratio chart of Nifty 500/Nifty 100 has been inching upward that clearly indicates relative outperformance. On the market breadth front currently 54% of stock in the Nifty 500 universe are trading above 200 days SMA compared to last month reading of 30% signaling renewed momentum.

* Key monitorable which would provide cushion to the ongoing up move:

* a) Development of geopolitical concern

* b) US Fed Policy

* c) Brent crude faced resistance at $78. Lack of follow through strength would result into consolidation in 78-66 levels

* d) Further weakness in US Dollar index

* e) Bilateral Trade Agreement between India and US

* The key support threshold of 24500 for the Nifty is based on lower band of past four weeks consolidation coincided with 50% retracement of recent rally (23935- 25222) and Friday’s panic low is placed at 24473.

Nifty Bank : 55828

Technical Outlook

* The Bank Nifty closed on a positive note, ahead of FOMC meet . The index settled at 55 ,828 , up 114 points . The Nifty Pvt Bank index outperformed the benchmark, closed on a positive note at 27776 , up 109 points .

Technical Outlook

* The Bank Nifty started the day on a flat note, and traded within the initial range of 421 points throughout the session and made a small bull candle, signaling pause in the down move .

* Key point to highlight is that, over past five weeks Bank Nifty has managed to close above last week’s low . In current scenario, despite ongoing geopolitical worries it has maintained the same rhythm by sustaining above its last weeks low, indicating uptrend is intact . Since April supportive efforts are emerging in the vicinity of 20 -day EMA indicating index will gradually resolve higher and set the stage towards 57049 . While, strong support is placed at 55000 and 54500 zone, which is 50 -day EMA coincides with consolidation zone . Any, decline from current levels would offer incremental buying opportunities .

* Structurally, the Bank Nifty is witnessing an elongation of rallies followed by shallow retracements, signifying a robust price structure . The April months up -move of 14 % is stronger compared to the March month’s 9 % rise . Additionally, the declines are becoming shallower, with the April months decline being 4 . 6 % versus 5 . 4 % in March 2025 after recent 7 % upmove we expect same rhythm to continue where the current decline should be seen as buying opportunity .

* Underperforming the benchmark the PSU Bank index witnessed second session of profit booking and closed on a negative note . The index broke out from an eleven -month falling trendline on 19th May and, since then, has been forming a higher -high -low structure on weekly which is intact, indicating strong upside momentum . While the Bank Nifty is trading 2 % below its all -time high, while the PSU Bank index is still trading ~17 % below its all - time high, presenting a compelling case for a catch -up move . Meanwhile, immediate support on the downside is placed at 6,700, which is the 38.20% retracement of the rally from 7th April 2025 to 9th June 2025 .

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