Indian equity benchmarks closed the monthly expiry session on a positive note despite muted global cues and settled at 23592, up 0.45% - ICICI Direct
Nifty :23592
Technical Outlook
Day that was…
Indian equity benchmarks closed the monthly expiry session on a positive note despite muted global cues and settled at 23592, up 0.45%. The market breadth was flat, with an A/D ratio of 1:1.10 The Nifty small cap outperformed the benchmark where it gained 1.15%. Sectorally, Auto, Pharma and Health Care were the laggards while, PSU Bank, Oil & Gas, and Realty outshone.
Technical Outlook:
* The Nifty started the session on a negative note. However supportive efforts from 200 days EMA helped index to recover lost ground and settle the session on a positive note. As a result, the daily price action formed a green candle, indicating pause in downward momentum.
* Key point to highlight is that, the index took support in the confluence zone of 200/100 day EMA and 23.60% retracement of the up move (21964-23869), indicating strength of the trend. After the sharp ~1,900-point rally (over past 3 weeks), amid overbought zone the Nifty reached around 23800 in Tuesday’s session where it faced resistance, which coincides with 61.8% retracement of previous fall (24858-21964). Hence any pullback should be considered as healthy retracement that would help index to form a higher base and eventually pave way for further upside towards 24200 in coming weeks. In the process, volatility would prevail amidst clarity on retaliatory tariff announcement. On the downside 23,000 psychological mark would act as strong support and the focus should be on accumulating quality stocks with a medium-term perspective.
* Structurally, the Nifty witnessed a faster pace of up-move where it regained previous 19 days of fall in just 14 trading session, indicating structural turnaround backed by improvement in breadth as well as sentiment indicator. Any pullback from here should be capitalized as buying opportunity, wherein volatility will prevail, amid upcoming result season and tariff related clarity from Trump. Given this historical precedent, we believe the index is approaching price-wise maturity with limited downside and is poised for the next leg of the uptrend. Our constructive bias is validated by following observations:
* a. The ratio chart of Nifty/Dow Jones has recorded a breakout from a six-month 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, after breaking out from a three-month falling trendline index is forming higher high-low formation which is an encouraging sign of inherent strength. Both the indices have seen a rebound after approaching maturity of price and time wise correction. Hence, the focus should be on accumulating quality stocks (backed by strong earnings) in a staggered manner.
*Formation of higher peak and trough indicates buying demand at elevated support base, which makes us revise the support levels at 23,000, which represents a 50% retracement of the current upmove (21,965–23,869). This level is expected to act as a strong cushion, ensuring that dips remain buying opportunities rather than trend reversals.
Nifty Bank : 51576
Technical Outlook
Day that was :
The Bank Nifty closed the monthly expiry session on a positive note where it settled at 51576 , up by 0 .72 % . The Nifty PSU Banking index outperformed the benchmark, closing the day at 6296 , up by 2 .50 % .
Technical Outlook :
*The Bank Nifty opened marginally on a negative note, however buying demand from the vicinity of previous day low recovered most of the intraday losses and the index settled with a bullish bias . The price action resulted in sizeable bull candle, indicating supportive efforts at lower levels .
*Key point to highlight is that, the index is witnessing range bound action after encountering resistance at previous swing high of 52000 and is now trading in a 1000 points range (52000 -51000 ) since last three trading sessions . Following the sharp up -move of ~ 9 % the index is now witnessing a breather, where the daily stochastic oscillator tilted downward from the overbought zone . Going ahead, the ongoing pullback should be viewed as a healthy retracement and capitalized as buying opportunity as we expect the index to form higher base and eventually head towards the mark of 52500 being 80 % retracement mark of the previous fall (53888 -47703 ) . On the other hand, the near -term support is placed at 50200 which is 38 . 2 % Fibonacci retracement mark of the recent up -move (47703 -51801 ) .
*Structurally, the Bank Nifty bounced from the vicinity of 100 - week EMA after forming a triple bottom pattern . Additionally, the faster pace of retracement resulted in the momentum indicators to rebound from bearish extremes . The weekly stochastic oscillator has observed a bullish crossover suggesting structural strength .
*In tandem with the benchmark index, the Nifty PSU Bank index witnessed a sharp up -move after opening on a flat note, indicating buying demand at lower levels . The price action resulted in a bullish engulfing pattern where it regained almost 80 % of the previous two sessions losses, signifying the structural strength . Going ahead, we expect the index to continue the outperformance and move towards the mark of 6600 being 61 . 8 % retracement of the previous fall (7248 - 5530 ) . On the other hand, the mark of 6000 will provide immediate support being 50 % retracement of recent up - move(5530 -6366 )
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