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Nifty :22834

Technical Outlook

Day that was…

Indian equity benchmarks closed on a positive note tracking positive global cues and settled at 22,834, up 1.45%. The market breadth was in favor of advance, with an A/D ratio of 3.5:1, as the broader market outperformed, where both the Nifty midcap index and the Nifty small cap index closed on a positive note, up by 2.18% and 2.71% respectively. Sector-wise, all sectors closed in green where, Realty, Consumer Durables and Auto outperformed.

Technical Outlook

• The Nifty opened gap up (22508-22662) and made higher high-low where intraday dips were bought in. As a result, the daily price action formed a strong bull candle. Today’s up move was backed by above average volume, indicating strength of the trend. • A key point to highlight is that, with Tuesday’s sharp up move, index recorded breakout from 3 weeks trading range (21965-22676) that helped index to fill the negative gap seen during (22720-22518) and finally closed above 20 days EMA for the first time in last one month. Revival in momentum makes us confident to believe that index has now paved the way towards the psychological mark of 23000 that coincides with six months falling trendline. In the process, volatility is likely to persist, influenced by tariff-related developments and the FOMC meeting starting today. Now, the base of the consolidation range 22300 will serve as a key support level. Focus should be on accumulating quality stocks from a medium-term perspective.

• Structurally, after the fall of 16% in last five months the sentiment and momentum indicator bounced from the bearish extreme levels. Meanwhile, past three decades data suggest that, the average drawdown below the 52-week EMA has been 6-7%, and in tandem with that even in current scenario index staged a recovery from same reading of 6%. Considering aforementioned evidences, we believe that the index is approaching pricewise maturity with limited downside and now it would undergo time wise correction wherein it would consolidate and form a base formation that would set the stage for next leg of up move. Our constructive bias is validated by following observations:

• a. The ratio chart of Nifty/Dow Jones has recorded a breakout from a sixmonth falling channel, indicating the domestic market could relatively outperform US equities going forward.

• b. The cool off in US 10-year Yields, Dollar Index and Brent crude augurs well for emerging markets by easing inflation and boosting sentiment.

• On the broader market front, the Midcap and Small cap indices outperformed the broader market, and broke out from falling trendline, indicating inherent strength, suggesting extended pullabck. Hence, the focus should be on accumulating quality stocks (backed by strong earnings) in a staggered manner.

• After basing for three weeks, Tuesday’s breakout from the consolidation zone and formation of a higher high-low signifies positive bias, which made us revise the support levels around the base of the consolidation zone of 2230

Nifty Bank : 49314

Technical Outlook

Day that was :

The Bank Nifty settled the day on a positive note at 49314 , up by ~ 2 % . The Nifty PSU Banking index outperformed the benchmark and settled at 5902 , up by 2 .29 % .

Technical Outlook :

• The Bank Nifty opened with a gap up (48354 -48792 ) and made a higher high -low where intraday pull backs were bought in . The price action created a strong bull candle making higher high -low from last five sessions indicating strength of the trend . • On expected line, the index broke out from the falling trendline and gave a decisive close above 20 /50 DEMA and three weeks high which has now opened the door towards 50000 mark . Meanwhile, near -term support on the downside is now revised to 48400 which is 61 . 8 % retracement of recent up move (47702 -49400 ) . The daily RSI witnessed a falling trendline breakout, indicating acceleration in up -move .

• Key point to highlight is that, despite high volatility observed in last week amid US tariff concerns and the India as well as US Inflation data, the index managed to hold above the lower end of the broader consolidation range of (47800 ) for the fourth time in last two month on a closing basis, indicating resilience as domestic market is faring well compared to the global peers .

• Structurally, with 12 % correction already in place the index is witnessing a base formation near the lower band of 2 years rising channel, which is also in the vicinity of 100 -week EMA .

• In tandem with the benchmark index, the Nifty PVT Bank index closed above 20 /50 DEMA and three weeks high indicating positive bias, which has opened the door towards 25000 mark, being recent swing high . Meanwhile, immediate support is revised to 24100 which is 61 .80 % retracement of the recent up move (23783 - 24679 ) .

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