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Nifty : 24347

Technical Outlook

Day that was…

Equity benchmarks started the truncated week on a flat note amid elevated volatility. Nifty settled Monday’s session at 24347, down 20 points. Broader market relatively outperformed by gaining 02.%, each. Sectorally, Consumer Durables, Metal, Realty outshone while PSU Bank, FMCG, Auto underperform

Technical Outlook:

* The index recouped initial losses and settled volatile session on a flat note. The daily price action formed a high wave candle, indicating elevated volatility amid stock specific action

* Going ahead, we expect prolongation of consolidation in the broader range of 24400-23800. We believe, markets would await for direction from global markets coupled with India and US inflation data. Only a sustained follow through above last week’s Doji high of 24400 would lead to extended pullback towards 24700 in coming weeks. Traders should note that, intermediate correction is a part of structural up move which offers incremental buying opportunity

* Structurally, key point to highlight is that since Oct-2023 Nifty has not corrected for more than 2 weeks wherein intermediate correction have been limited to 5%. In the current scenario as well, we expect index to maintain same rhythm and stage a pullback as Nifty has already corrected 5% over past 2 weeks

* India VIX is key monitorable from risk perspective. Last week VIX has cooled down significantly from resistance zone of 23 indicating lower risk perception in short term

* Globally, Nikkei and US indices have also bounced from oversold readings and expected to consolidate

* The formation of lower high-low on the weekly chart makes us revise support at 23800 as it is confluence of 20 days EMA coincided with last week’s low

Nifty Bank : 50578

Technical Outlook

Day that was :

Nifty Bank gained 93 points or 0 . 2 % on Monday after a volatile trading session . Large private banks helped index to stay in green and recovery from early losses .

Technical Outlook :

* The Index started the week with a gap down action, however held Fridays bullish gap area (50150 ) and recovered nearly 700 points before giving up partial gains . Index is seen holding its rising 100 -day average and posing a technical bounce from oversold readings over past five sessions . Mondays price action formed a high wave candle with shadows on either side indicating lack of directional bias

* Going forward, key resistance is placed now at 51300 levels which is last Mondays bearish gap area and value of down ward slopping trendline drawn from life highs . Further, a decisive breach of short term support of 49600 would indicate extended correction in coming sessions towards 48500 which is confluence of a) 61 . 8 % retracement of post election rally and b) value of rising 200 -day ema (48200 )

* Price structure : A) We observe that index is undergoing healthy retracement from overbought readings after 15 % rally . Currently, index has retraced, post election, 21 session rally by 50 % over 22 sessions, indicating corrective nature of decline and would lead into higher bottom formation

* B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current context 7 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 200 -day ema around 48500 levels

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