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Nifty : 23465

Technical Outlook

Week that was…

Equity benchmarks extended gains over second consecutive week tracking firm global cues. The Nifty gained 0.75% to settle the week at 23465. Broader market outperformed the benchmark as Nifty Midcap and Small cap zoomed ~4%, each. Sectorally, Defense, Auto, Infra, PSU remained at forefront while IT, FMCG extended breather

Technical Outlook:

• The index started the week on a positive note and consolidated near life highs. The weekly price action formed a bull candle carrying higher high-low, indicating continuance of positive momentum. Boarder market relatively outperformed and endured its record setting spree

• In the upcoming truncated week, we expect Nifty to sustain above the key hurdle 23400 and eventually head towards 23800 in coming weeks. In the process, temporary breather after 10% rally (from June low) cannot be ruled out. However, such breather should not be construed as negative instead capitalised it as incremental buying opportunity as strong support is placed at 22800. In the process, stock specific themes are expected to outperform. With market now focusing on government’s 100-day agenda and budgetary allocations, we expect outperformance in BFSI, PSU, Capital Goods & Infra, Defense, Power, auto. Our positive bias is further validated by following observations: a. Market breadth has shown renewed optimism as stocks above 50-day ema has improvised from 51% just before elections to 88% this week b. The market fear gauge India VIX has plunged 24% this week (60% from last week’s high) as anxiety around the election event settles down c. Buoyancy in US markets bodes well for domestic market as it has direct correlation with the developed market

• Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us revise support base at 22800 as it is 20 days EMA

Nifty Bank: 50002

Technical Outlook

Week that was :

Nifty Bank index gained for fifth week in a row after a choppy sessions . PSU bank index gained 2 . 5 % outperforming their private peers as inflation remained lower . HFC’s outperformed after government announced its policy stance on affordable housing . Nifty Bank index closed at 50002 , up 0 . 4 % or 199 points

Technical Outlook

The index consolidated gains in a very narrow band of 49700 -50200 levels even as RBI maintained its status quo on rates amid cool -off in inflation . Last weeks consolidation near psychological mark of 50000 should be seen as a breather in uptrend after run -up

• Going forward, we expect index to consolidate in 49000 - 50000 band and eventually head further north towards life highs of 51133 in coming weeks in non -linear fashion . Therefore, intermediate dips or retracement of past four week gain should not be construed as sign of weakness, rather be used as an incremental buying opportunity as we expect index to form higher base above 48500 levels

• In the process, key support will be placed at 48500 levels for coming weeks as it is a) 38 . 2 % retracement of gains from election day lows and b) value of rising 50 -day ema (48543 ) • As index has already undergone 10 % correction on election day, we believe price wise correction is behind us and index to gradually continue its structural uptrend after brief period of consolidation

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