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Nifty : 24302

Technical Outlook

Day that was…

Equity benchmarks continued to inch upward tracking firm global cues. The market breadth remained positive with A/D ratio of 1.3:1 as broader market relatively outperformed. Sectorally, IT, Auto, Pharma outshone while financials, FMCG took a breather

Technical Outlook:

* The index clocked fresh All Time High of 24401 and subsequently pared initial gains as the day progressed. As a result, daily price action resulted into small bear candle carrying higher high-low, indicating continuation of up trend amid stock specific action

* The sequence of higher high-low signifies elevated buying demand that makes us reiterate our positive bias and expect Nifty to gradually head towards 24400. A decisive move above 24400 would open the door for next leg of up move failure to do so would lead to consolidation in 24400-23900 zone. Key point to highlight is that, past four week’s sharp up move of 14% has hauled daily and weekly stochastic oscillator in overbought territory (placed at 85 and 95, respectively). Thus, any temporary breather at higher levels should not be construed as negative instead buying dips would be the prudent strategy as immediate support is placed at 23900

* Going ahead, markets will look for further direction from Union Budget announcements, progression of Monsoon, inflation expectations and Q1FY25 earnings. From the seasonality perspective, July has produced positive returns in 80% occasions over past two decades and similar probability of positive returns is observed even in past five election years spanning two decades wherein budget related expectations tend to weigh on sentiments. Average returns for July has been >2%

* Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us revise support base at 23900 as it is 10 days EMA coincided with 38.2% retracement of past eight sessions up move

Nifty Bank: 53103

Technical Outlook

Day that was :

Nifty Bank index closed marginally in green after a rudderless trading session . Index closed at 53103 , up 14 points on Thursday

Technical Outlook :

* The index traded in a narrow range after recording new All time highs as prices consolidated recent gains amid stock specific action . Price action formed small bear candle with higher high -low sequence indicating continuation of positive bias and lack of any notable selling pressure . However, over past three -four sessions momentum has decelerated owing to higher bought readings on weekly time frame

* Going forward, we expect index to consolidate in the 52000 - 53500 band amid stock specific action ahead of earnings

* PSU banking stocks have witnessed extended profit taking/consolidation over few weeks and expected to form a higher bottom formation over next few sessions

* Meanwhile, we revise short term support to current week’s low of 52000 which also coincide with rising 10 -day ema that has been held since election outcome over past nineteen sessions

* Price structure : We observe that index is maintaining its higher high -low formation on multiple time frames and remain in steady uptrend and short term declines are attracting buying support . Hence consolidation in the short term will help index to undergo higher base formation and work out of overbought readings

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