IGI Logo

Nifty : 24852

Technical Outlook

Day that was…

* Indian equity benchmarks on renewed geopolitical conflict in Middle East closed on a negative note. The Nifty settled at 24853 down 93 points. Market breadth was in favor of declines, with an A/D ratio of 1:2 where broader markets underperformed. Sectorally, barring IT all sectors closed in red, where Pharma, Healthcare and Metal underperformed.

Technical Outlook:

* Nifty started the day on a negative note; previous session’s high acted as resistance that resulted into lower-high-low throughout the session where intraday rally were sold into. This led to the formation of bear candle, signaling breather.

* 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 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 23 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 56% 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 : 55714

Technical Outlook

* The Bank Nifty closed on a negative note, amid escalating tension in Middle East . The index settled at 55 ,714 , down 0 .41 % . The Nifty Pvt Bank index mirroring the benchmark, closed on a negative note at 27667 , down 0 .35 % .

Technical Outlook

* The Bank Nifty started the day on a negative note, where it filled the gap and faced resistance near previous sessions high that resulted into lower -high -low throughout the session to close the session near days low and made a small bear candle, signaling breather .

• Despite ongoing geopolitical worries Bank Nifty closed above previous sessions low maintaining its higher -high -low structure from past five -week where it closed above previous weeks low signaling robust price structure . The Friday’s gap -down move got arrested in the vicinity of 50 % retracement of the move from (53483 -57049 ) indicating, pause in down trend . Immediate hurdle for the index is at 57049 . While, 55000 and 54500 zone will act as strong support, 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 profit booking in the vicinity of 50 % retracement of the decline (7249 -6833 ) 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 .

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631