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Nifty : 25250

Technical Outlook

Day that was..

The equity benchmark extended losing streak over fourth consecutive session tracking geopolitical tension in middle east. Nifty slumped 547 points or 2.1% to settle Thursday’s session at 25250. The market breadth turned red with A/D ratio of 1:3.5. Sectorally, all major indices ended in red weighed down by financials, auto, and realty.

Technical Outlook:

• The index started the session on a negative note and gradually inched southward as intraday pullbacks were short lived. As a result, daily price action formed a sizable bear candle carrying lower high-low, indicating corrective bias. In the process, India VIX (which gauge the market sentiment) gained 9%. The past four sessions decline has hauled daily stochastic oscillator in oversold territory (placed at 5), indicating possibility of minor pullback can not be ruled out

• Contrary to our view, Nifty breached key support of 25300 and settled below it, indicating extended correction. Therefore, for a meaningful pullback to materialize, index need to decisively close above previous sessions highs (25639). Failure to do so would lead to extended correction towards 24800. Meanwhile, psychological mark of 26000 would act as immediate hurdle.

• On the broader market front, Midcap index has recorded breakdown from 2 months rising channel, indicating pause in upward momentum. Hence, it is important to keep stock specific action ahead of upcoming earning season that coupled with elevated volatility amid ongoing geopolitical tension. • Structurally, index is undergone healthy retracement of past 2 months 10% rally, indicating robust price structure. However, breach of intermediate support makes us revise support base at 24800 as it is confluence of:

• A)61.8% retracement of Aug-Sept rally 23894-26277

• B) In CY24, index has not corrected more than 5% from All Time High. In current scenario, 5% correction would mature around 24900

Nifty Bank : 51845

Technical Outlook

Day that was : Nifty Bank index declined for fourth session in a row on amid escalation of geopolitical tension in middle east . Index settled the session at 51845 , down 2 % while PSU bank index was down 1 . 2 %

Technical Outlook :

• The Index witnessed a gap down opening tracking muted global cues and subsequently inched downward as the day progressed . Consequently, index formed a sizable bear candle with lower high low indicating continuation of negative bias . On short term basis 53500 would act as key hurdle for the index in the coming sessions

• The index breached key support of 52800 , contrary to our expectation and drifted downward . The lack of follow through strength signifies corrective bias . However, one should refrain from creating aggressive short position as past four sessions 5 % decline hauled daily stochastic oscillator in extreme oversold territory of 5 , indicating impending pullback . Thus, a decisive close above previous sessions high would confirm pause in corrective bias else continuation of corrective bias towards 50700

• PSU bank index is hovering around key support and expected to attract supportive efforts near their long term mean .

• Price structure : Recent up move in Bank Nifty is of higher magnitude (50369 -54467 ) as compared to previous up leg (49654 -51750 ) indicating improving price structure and corroborates broader bullish view . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for banks .

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