IGI Logo

Nifty : 22332

Technical Outlook

Equity benchmarks defied the global trend and edged lower as Nifty plunged 338 points or 1.5% to settle the session at 21998. The market breadth remained in favour of declines with A/D ratio of 1:13 as Nifty midcap and small cap lost ~4% and 5%, each. Sectorally, barring FMCG all other indices ended in red weighed down by financials, metal, Oil & gas

Technical Outlook

• The index started the session on a subdued note and gradually inched downward as intraday pullbacks were short lived. The selling pressure accelerated on the breach of immediate support of 22200, contrary to our expectation. The daily price action formed a sizable bear candle carrying lower high low indicating corrective bias

• Going ahead, we expect index to consolidate in the broader range of 22400-21800 range amid stock specific action. In the process, we reiterate our expectation of outperformance of large caps against the broader market

• Key point to highlight is that, past three sessions 600 points correction from life highs hauled Nifty near lower band of rising channel. Therefore, only a decisive close below key support threshold of 21800 would lead to extended correction. The level of 21800 remains the key level to watch out for as it is confluence of:

• A) Lower band of past two months rising channel

• B) 20 days EMA is placed at 21840

• On the broader market front, the past six weeks 15% correction in the Nifty small cap index pulled daily stochastic oscillator in oversold territory (currently placed at 5). Historically, in a secular bull market phases we have observed that small cap index have a tendency to undergo secondary correction to the tune of 17%. In the current scenario, with the 15% correction already behind us, we believe small cap index would be poised for temporary pullback post couple of percentage correction • On the sentiment indicator perspective, the net of daily advance-decline of Nifty 500 universe has recorded bearish extreme. Empirically, such a bearish extreme reading resulted into temporary pullback in subsequent weekrsday’s panic low is placed at 22224

Nifty Bank: 47328

Technical Outlook

The Nifty Bank declined for third session in a row post inflation numbers and amid weekly expiry . Nifty Bank index declined 301 points or 0 .64 % for the session to close at 46981

Technical Outlook :

• The Index traded started on a flattish note but then drifted lower post first few hours of the session as selling pressure in broader market weighed sentiments . Index closed near day lows to form a bear candle with lower high -low indicating continuation of corrective bias for fourth session . Although index held its immediate support of 46900 for second session, it needs to sustain above previous session highs (47500 ) to indicate pause in downward bias and meaningful recovery

• Going forward, we would tone down aggression a bit given current volatile market conditions which we expect to settle down over next few sessions . Meanwhile, key observation is that BankNifty has retraced preceding 6 session rally by 50 % over four sessions which is a sign of corrective phase from life highs . Only a decisive break of past two session identical lows at 46900 would indicate further correction towards next support zone of 46200 mark else consolidation in the 46900 -47800 would continue

• Next major support for BankNifty is placed around 46200 mark which is value of rising 100 -day ema and 80 % retracement of six session rally (45662 -48161 )

• Structurally, index is undergoing a broader consolidation phase since December 2023 which we expect to set stage for next up move . Within this phase index has maintained its rhythm of forming higher lows near 52 - week ema indicating continuation of structural uptrend .

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631