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Nifty : 22198

Technical Outlook

Day that was…

Equity benchmarks regained upward momentum after two days breather and settled the volatile session at 22198, up 76 points or 0.3%. The market breadth remained in favour of declines with A/D ratio of 1:1.5. Broader market relatively underperformed the benchmark. Sectorally, IT, auto, consumer durables outperformed while oil & gas, PSU Banks underwent profit booking

Technical Outlook

• The index started the session on a muted note. However, buying demand from lower levels helped index to recoup Monday’s losses and settled near days high. As a result, daily price action formed a sizable bull candle engulfing Monday’s real body, indicating positive bias

• The index is taking breather at the five weeks consolidation breakout area of 22100. Going ahead, we maintain our positive stance and expect Nifty to gradually head towards 22700 in coming month. We believe, bouts of volatility from hereon owing to global development would offer incremental buying opportunity. Thereby, dips should be capitalized to accumulate quality stocks as strong support is placed at 21800. Our positive bias is further validated by following observations:

• A) The consolidation breakout supported by faster pace of retracement (as past four week’s decline got retraced in just a single week), signifies robust price structure.

• B) Heavyweight Banking index (commanding >33% weight) has resolved higher after forming strong base above 200-day ema

• C) Buoyant global cues as US, Japan indices hit New Highs

• D) The cool off in oil prices and bond yields are likely to act as tailwind

• Structurally, Nifty appears to have approached maturity of seasonal correction in election year (historically, in election year index tends to bottom out in Feb/March followed by preelection rally). The strong rebound from key support highlights elevated buying demand that makes us revise support base at 21800 as it is confluence of: A. 61.8% retracement of current up move off mid Feb low of 21530 is placed at 21823 B. Last week’s low is placed at 21875 C. 20 days EMA is placed around 21910

Nifty Bank: 46588

Technical Outlook

Day that was :

The Nifty Bank snapped four session losing streak to end Tuesdays session on a flat note . Nifty Bank index breadth was flattish, although large private banks helped to compensate for losses in PSU peers . Nifty Bank index closed at 46588 , up 12 points for the day

Technical Outlook :

• The index commenced session on a flat note and dragged lower in first hour of trade . However, it made a decent bounce back from early lows, as supportive action emerged in the vicinity of 50 -day ema (46200 ) . Day’s price action formed a thrusting line candle highlighting recovery from lows . however maintained lower high -low sequence . A sustained follow through above Tuesdays high (46722 ) would be necessary for resumption of upward momentum

• We maintain our positive stance on index and expect index to head towards 47500 levels in the short term, barring monthly expiry related volatility . The fact that index has retraced only 38 . 2 % of recent six session rally (44633 -47363 ) over past five sessions, is a testament of inherent strength . We therefore recommend to adopt buy the dips strategy for target of 47500 which is a value of 80 % retracement of 16 -25th jan decline and bearish gap area

• Meanwhile, we expect index to hold short term support of 45800 levels as it is confluence of :

• A) 50 % retracement of rally (44633 -47136 ) at 45800

• B) rising 100 -day ema (45830 )

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