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Nifty : 25797

Technical Outlook

Day that was..

The equity benchmark took a breather after Monday’s sharp decline. Nifty settled at 25797, down 14 points. Market breadth turned positive with A/D ratio of 1.4:1. Sectorally, IT, consumer durables outshone while oil & gas underperformed

Technical Outlook:

* The index consolidated in a narrow range after initial decline and settled the session on a flat note tracking muted global cues. The daily price action resulted into doji like candle, indicating elevated volatility amid stock specific action.

* In today’s session, Nifty is likely to witness gap down opening tracking escalating geopolitical tension in middle east. We believe, ongoing correction would help index to cool off overbought conditions and set the stage for next leg of up move till then stock specific action would continue as earnings cues would kick in which would provide further directional bias. In the process, strong support is placed at 25300 zone. Hence, buying on dips would be the prudent strategy to adopt.

* On the sectoral front, the robust price structure of Banking and IT (which carries 50% weightage in Nifty) stocks signifies that broader positive structure remains intact. Meanwhile, recently underperformed Metal index has seen rejuvenation of upward momentum as it has given a breakout from fourmonth trading range with faster pace of retracement backed by rally in base metals aided by Chinese stimulus.

* The buying demand at elevated support base highlight inherent strength that makes us to maintain support base at psychological mark of 25300 as it is 61.8% retracement of recent up move (24753-26277)

Nifty Bank : 52922

Technical Outlook

Day that was :

Nifty Bank index declined for third session in a row on Tuesday amid lackluster trading session . Index closed at 52922 , down 55 points

Technical Outlook :

* The Index commenced the session on a muted note and then traded choppy for rest of the session in just 150 points range (52900-53050) despite weekly expiry. Index formed a small bull candle with lower high low indicating continuation of negative bias . On short term basis 54000 would act as key hurdle for the index in coming sessions

* In the process index approached immediate support of 52800 . Holding the same would keep pull back options open else extended correction towards 52000 levels cannot be ruled out which is value of rising 50 -day ema and 61 . 8 % retracement of most recent rally (50369 -54467 )

* PSU banks are expected to attract buying demand near their long term mean . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for PSU banks .

* Price structure : Current up leg in Bank Nifty is of higher magnitude (50369 -54467 ) as compared to previous up leg (49654 -51750 ) indicating improving price structure and corroborates bullish view

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