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Nifty : 22406

Technical Outlook

Equity benchmarks staged a strong rebound and recorded fresh All time High of 22497. Nifty gained 117 points to settle Wednesday’s session at 22474. however, the market breadth remain in favour of decline with A/D ratio of 1:3 as Nifty midcap and small cap indices dropped 0.5% and 2%, respectively. Sectorally, financials, IT, regained upward momentum while Oil & Gas, metal, realty underwent profit booking

Technical Outlook

• The index started the session on a subdued note ahead of US FED chair's testimony. However, buying demand in banking and IT heavyweights helped index to recover intraday losses and settle the session near life highs. The daily price action formed a , bull candle that engulfed past three sessions trading activity, indicating robust price structure

• The shallow retracement along with elongated rallies signifies inherent strength that makes us reiterate our positive bias and expect Nifty to head towards 22700 in coming week’s wherein large caps would relatively outperform the broader market as ratio of Nifty vs Nifty 500 has bottomed out. Thus, we advise to utilize dips as an incremental buying opportunity since immediate support is placed at 22000. Our positive bias is further validated by following observations:

• A) The Bank Nifty has witnessed a follow through strength post faster pace of retracement while Nifty IT witnessed supportive efforts from 50 days EMA (cumulatively Banking and IT carries 50% weightage in Nifty) that bodes well for next leg of up move

• B) buoyancy in global equities with steady domestic and foreign flow would act as tailwind for domestic equities

• The market breadth is declining which is a sign of mean reversion in mid/small cap stocks from over bought trajectory. Mid and small cap indices have rallied ~35% since October 2023. Intermediate corrections to the tune of average 12% in Mid and small caps have been a bull market norm. At present 8% correction is behind us

• Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us to revise support base at 22200 as it is confluence of: A. Thursday’s panic low is placed at 22224 B. 20 days EMA is placed at 22130

Nifty Bank: 47456

Technical Outlook

The Nifty Bank extended its winning streak for sixth session in a row amid weekly expiry, led by strong rally in Private banks . Nifty Bank index gained 384 points or 0 .81 % to close at 47965 on Tuesday

Technical Outlook :

• The Index started the session on muted note, however quickly regained strength after first 30 minutes of trade and then continued to rally for rest of the session . Initial gains were led by large private banks followed by PSU banks bouncing back in second half . Price action formed a sizeable bull candle with continuation of higher high and low sequence signaling continuation of positive bias on daily time frame . IN the process index approached in the vicinity of its life high and short term target of 48600 levels leading daily stochastics at 93

• Going forward, we reiterate our positive stance on index and expect it to challenge life highs of 48600 levels in coming week . However, some bouts of volatility at life highs are not ruled out leading to daily overbought conditions . Sustaining above 48600 would lead to further acceleration of upmove . We recommend using declines as an incremental buying opportunity

• Meanwhile, we have upgraded short term support to 46500 levels which is confluence of 61 . 8 % retracement of past five session rally that coincides with rising 50 - day ema

• Structurally it is worth noting that each time Index has a tendency to challenge and surpass life highs after a base formation near rising 52 -week EMA . In current context index has already formed a strong base near 44600 levels . We expect index to maintain its rhythm and challenge life highs of 48636 in March 2024

• Meanwhile, PSU bank index has hit fresh life high and expected to outperform on relative basis

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