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Nifty :23165

Technical Outlook

Day that was…

Indian equity benchmarks closed the session on a negative note amid weak global cues ahead of key event and settled at 23165, down 1.5%. Market breadth favored the advances, with an A/D ratio of 2:1, where broader market relatively outperformed. Sectorally, barring Oil & Gas all sectors were in red, where Realty, Consumer Durable and IT were the laggards.

Technical Outlook:

* The Nifty opened the truncated week with a gap-down (23519-23341) making lower-high-low throughout the day, where intraday pullbacks were sold into, tracking weakness in financials and IT heavy weights. As a result, the daily price action formed a bear candle with upper wick, indicating profit booking at higher levels.

* A key point to highlight is that, Nifty retraced 50% of the recent upmove from (22353-23869) where slower pace of retracement witnessed as six days of up move, retraced in five days despite volatility amidst anxiety around tariff announcement. Going ahead, holding 22800 (on a closing basis) post Tariff announcement would keep pullback options open, that would keep pullback option open towards 23800. In the process, bouts of volatility will prevail while settling down the anxiety around US tariff announcement coupled with the upcoming earnings season. Hence stock specific action is likely to continue.

* Structurally, after a steep 16% correction over the last five months, market sentiment and momentum indicators have rebounded from bearish extremes. The percentage of stocks trading above their 50-day SMA surged from 7% to 49% in Tuesday’s session, highlighting a strong improvement in breadth. The index also retraced its previous 19-session decline in just 14 sessions, confirming a faster pace of retracement. After a ~1,900-point rally, the Nifty faced resistance at 23800, coinciding with 61.8% retracement of previous fall (24858-21964). Any pullback from here on should be considered as healthy retracement, which will allow the index to form a higher base around 22800 mark. Hence, the focus should be on accumulating quality stocks with a medium-term perspective

* On the broader market front, Nifty Midcap and Small cap indices have seen a rebound after approaching maturity of price and time wise correction. Historically, maximum average correction in Midcap and small cap indices have been to the tune of 27% and 29% while time wise such correction lasted for five months. Subsequently, both indices have seen 28% returns in next six months.

* Formation of higher peak and trough indicates buying demand at elevated support base, which makes us revise the support levels at 22800, which represents a 61.80% retracement of the current upmove (21,965–23,869) and the gap zone of 20th March (22973-22940). This level is expected to act as a strong cushion, ensuring that dips remain buying opportunities rather than trend reversals.

Nifty Bank : 50827

Technical Outlook

Day that was :

The Bank Nifty settled the week on a negative note where it closed Tueday’s session at 50827 , down by 1 .06 % . Meanwhile, the Nifty PSU Bank index outperformed the benchmark by closing on a flat note and settled the day at 6254 , down by 9 points

Technical Outlook :

* The Bank Nifty opened the truncated week on a flat note, however selling pressure at higher levels resulted in a downward momentum where the index formed lower high low formation as intraday pullback were sold -off . The price action resulted in a sizeable bear candle largely due to selloff in heavyweight financials, indicating prolonged consolidation .

* Key point to highlight is that, after a sharp up -move of ~ 9 % from the multi support zone of 47800 , the Bank Nifty is now witnessing breather since last five trading sessions . The index has not even retraced 38 . 2 % of the recent up -move (47702 -52064 ) and has now closed around the previous gap area (50672 -50796), thus pricing in the anxiety ahead of the key event . Additionally, the daily stochastic oscillator tilted downward from the overbought zone, indication a breather in upward momentum . Going ahead, holding 50200 -50000 on a closing basis post event would keep the pullback options open, where bouts of volatility will prevail amid, US tariff announcement coupled with the upcoming earnings season . Hence, buying on dips would be the prudent strategy to adopt with the strong support placed around 50000 mark, with stock specific action likely to continue .

* Structurally, the Bank Nifty bounced from the vicinity of 100 -week EMA after forming a double bottom pattern . Additionally, the swift up move in banking space helped Bank Nifty to surpass past two months high, suggesting inherent strength . The current up move of 9 % is strongest since September that confirms resumption of uptrend . As a result, previous five -month “sell -on -rally” approach has now shifted to a “buy -on -dips” strategy, amid structural improvement .

* In tandem with the benchmark index, the Nifty PSU Bank index witnessed a range bound action where it traded within a tight range of ~100 points throughout the day . The index is witnessing a slower pace of retracement as over past five days it has merely retraced 38 . 2 % of preceding seven days of up -move (5740 -6366), indicating relative outperformance . Key point to highlight is that, the PSU Bank recovered more than 90 % of its previous month losses with a higher high -low formation after nine months of corrective bias, indicating structural turn around . Going ahead, we expect the index to continue its outperformance and head 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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