IGI Logo

Nifty : 24176

Technical Outlook

Week that was ..

Equity benchmark wrapped the quite monthly expiry week on a flat note, settling at 24176, down 0.3%. However, the real momentum stayed with mid and small caps as both indices endured their northbound journey by clocking fresh All-Time Highs, up ~0.5%. Sector leadership shifted seamlessly to Pharma, Metal while IT staged a strong rebound in IT. On the flip side, FMCG continued to underperform the benchmark.

Technical Outlook :

• Nifty consolidated in a narrow range throughout the week and settled on a flat note. As a result, weekly price action resulted in a high wave candle carrying higher high-low, indicating prolonged consolidation.

• Index is likely to open gap-down on back of global cues and rise in brent crude prices. In today’s session, we expect volitivity to remain elevated tracking MSCI rebalancing. The index has marginally settled around the four months rising trend line which has been majorly held despite host of negativities around geopolitical concerns. From short term perspective, defending past two week’s low (~24000) would keep pullback options open towards 24600. Failure to do so would result in extended correction wherein strong support is placed around 23600 as it is placement of 50% retracement of Apr-Aug rally (22182-24774).

• Structurally, past five months trading activity has been confined in entire March month’s trading range (24989-22284). Such prolonged range contractions are rare which systematically set the stage for a directional move. Hence, as long as index holds swing low of 23600, we believe buy on dips structure remains intact

• Past two decades of historical data suggest that September has been the volatile month. However, such volatility has paved the way for direction move in subsequent months

• Smallcap index has logged an impressive ~35% rally off April low and reclaimed its all time high after 18 months. The historical data suggest that this is the initial leg of multi-year secular bull run rather than an overextended technical move. We believe that current up move has laid the foundation for a secular up move Our bullish outlook on the broader market is anchored by following key observations

a) Major corrections of ~35% or more have historically marked the beginning of a fresh market up-leg rather than the end of the broader bull cycle

b) Post such correction, uptrends have sustained for subsequent ~20–22 months on average, with significant rally in subsequent year

c) With current rally (~35%) only five months of its expansion, history suggest that we are just starting the secular up move, where the largest gains are yet to unfold

• Brent crude snapped 2 weeks winning streak and formed a lower high-low. Continuation of corrective bias would fuel the momentum in the Indian equities

Key Monitorable :

• Monthly Auto sales number

• Geopolitical Development

• Declining crude oil prices

Intraday Rational :

• Trend – Strong buying demand from 4 months rising trend line confirms robust price structure

• Levels – Buy around 80% retracement of last 7 day range

Nifty Bank : 57496

Technical Outlook

Week that was :

Bank Nifty ended the volatile week on negative note down 0.46% at 57496 on back of mixed global cues.

Technical Outlook :

• The supportive efforts from 50 days EMA helped index to regain upward momentum but settle the week on negative note. As a result, the weekly price action formed small bear candle with higher high higher low, indicating prolonged consolidation.

• Over last two months Index has been trading in contracting triangle range while sustaining well above 200 days EMA. Going ahead follow through buying above 58000 levels would be required for resumption of uptrend which would help index to challenge the swing high of 58700 in coming weeks. Failure to do so would result into extended consolidation in 58000- 56700 zone.

• In the process, strong support is placed around 56700 being the placement of four months rising trendline coincided with 200 days EMA .

• The PSU Bank Index formed high wave candle with higher high lower low indicating volatility in vicinity of 20-day EMA. Going ahead, follow through strength above last week (8744) high would open the door for next leg of up move towards 9100 levels

Intraday Rational :

• Trend - Prolongation of consolidation in vicinity of 50 days EMA, indicating positive bias

• Levels : Buy around 80% retracement of last 7 day range

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

SEBI Registration number INZ000183631