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Nifty : 19901

Technical Outlook

* The index opened with a gap down (20050-20115) and remained under pressure for rest of the session resulting in a bear candle that signifies profit booking at life highs after three weeks of rally. On immediate basis, todays bearish gap area around 20115 would act as immediate hurdle for index. Profit booking in some runup small and midcap stocks led to negative market breadth on Wednesday

* Going forward we expect Nifty to undergo healthy retracement of three week rally (19200-20200) wherein key support is placed at 19600. Current decline is expected to result in higher bottom formation around 19600 followed by short term consolidation which should not be construed as negative but will act as a base for next leg of rally within structural up trend

* On the broader market front, Midcap index has rallied >40% over past six months and currently undergoing a healthy retracement. In a secular bull market secondary correction is a common phenomenon wherein historically 8-10% corrections in midcap index provided incremental buying opportunity. Therefore, temporary breather/consolidation would make market healthier from medium term perspective

* The formation of higher peak an trough supported by across sector participation makes us confident to revise support base at 19600 as it is confluence of:

* a) 61.8% retracement of current up move (19223-20222), at 19605

* b) Earlier resistance of 19600 will now act as support as per change of polarity concept 

Nifty Bank: 45384

Technical Outlook

* The price action for the day formed a bear candle with bearish gap above its head (45745 -45980 ) indicating extended profit booking . Large PSU banks however relatively outperformed

* Going forward, we expect index to consolidate in the short term in 45000 -46300 zone After three weeks of rally index is undergoing healthy retracement that would offer buying opportunity with key support at last week’s low at 45200 -45000

* Our view is backed by following key observations

* Key immediate support is at last week low of 45200 that coincides with 20 day ema placed at 45000

* PSU banks index has given a breakout from decadal range indicating structural turnaround and expected to outperform

* Private banks barring HDFC continue to remain resilient

* PSU Banking index is expected to continue its relative outperformance as index has recently concluded breakout from multi year highs

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