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Nifty : 24039

Technical Outlook

Day that was…

Indian equity benchmarks paired initial gains tracking geopolitical worries. Nifty settled the week at 24,039, up by 1872 points. Broader market relatively outperformed as Midcap gained 1.73%. Sectorally, barring FMCG and Nifty financial services all the sectors closed in green, where IT, Auto and Realty were outperformers of the week.

Technical Outlook:

* The Nifty opened the week with a gap-up (23851-23949) but failed to sustain above Jan Highs leading to profit booking. Consequently, the weekly price action formed green candle with upper wick, indicating breather.

* Nifty expected to open gap-up amid easing tariff concerns. In the upcoming truncated week, we expect volatility to remain elevated tracking geopolitical worries wherein Nifty is likely to consolidate in the broader range of 24500- 23300 zone. We believe, over past two months index has formed a durable bottom. Hence, we believe, ongoing breather would help index to form higher base by cooling off the overbought condition after 12% rally seen over past three weeks and make market healthy. For the coming week, strong support is placed at 23300-23000 zone. Meanwhile, on the upside, 24500 would continue to act as immediate resistance. Over past three decades there have been three major instances of escalations due to armed conflicts in India (i.e. Kargil War, 26/11, Pulwama attack). On each occasion it formed major bottom, once anxiety around the event settled down and garner decent return in subsequent three months. Even in current scenario, possibility of knee-jerk reaction on escalation of geopolitical worries cannot be ruled out. However, historical evidences suggest that market will eventually stabilise. Hence, we advise not to panic but rather build quality portfolios from medium to long term perspective amid ongoing earning season.

* The blend of following parameters makes us believe that the index has formed a durable bottom. Tracking the historical data, benchmark index has staged a strong rebound after approaching the price and time wise correction. Key point to highlight is that the current up move is backed by the faster pace of retracement, indicating structural turnaround that has been further validated by significant improvement in momentum, breadth as well as sentiment indicators. Key monitorable which would act as tailwind:

* a) Bilateral Trade Agreement between India and US

* b) Continuation of FII's inflow

* c) Further weakness in US Dollar index post breakdown from two years consolidation

* d) Decline in Brent crude oil prices

* On the broader market front, we witnessed a breather in the Nifty Midcap and Small Cap indices, post the strong pullback of 18% and 21%. Notably, the mid Cap index has retested its 200-day EMA, signaling inherent strength.

* We expect volatility to prevail amid ongoing global and domestic uncertainty, However, with the ongoing geopolitical tensions, we revise our support base at 23000-23300 zone which is 50% retracement of the move from (21743- 24365) and 50-day EMA

Nifty Bank : 54664

Technical Outlook

Day that was :

The Bank Nifty closed on a positive note for the second consecutive week where it settled the week at 54664 , up by 0 .69 % . Meanwhile, the Nifty PSU Bank index underperformed the benchmark where it settled the week on a flattish note at 6535 , up by 0 .20 %

Technical Outlook:

* The Bank Nifty opened the week with a gap -up continuing the buying demand from the previous week . However, it encountered resistance at the psychological mark of 56000 and gave up on the majority of the gains, indicating profit booking at higher levels . The price action resulted in a small bear candle with long upper wick, indicating extended breather post sharp up -move .

* Key point to highlight is that, the Bank Nifty witnessed some profit booking after facing rejection at the psychological mark of 56000 which is also the 123 % external retracement of the previous fall (54467 -47702), indicating breather following the sharp up -move of 14 % in 10 trading sessions . The weekly stochastic oscillator entered the overbought zone, suggesting extended breather . In the upcoming truncated week, we expect volatility to remain elevated tracking geopolitical worries wherein the Bank Nifty is likely to consolidate in the broader range of 56000 -54300 , where the mark of 54300 will act as an immediate support, being 61 . 8 % retracement of recent up -move (53085 -55961 ) . Going ahead, we expect the index to form higher base around 54300 mark and resume its upward momentum where is stock specific action in likely to continue on the basis of ongoing result season . The traders are to accumulate quality stocks in staggered manner from a medium-term perspective.

* Structurally, the Bank Nifty is showing resilience as compared to the benchmark as it witnessed faster pace of retracement where it regained previous 6 months of decline in less than 2 months, indicating structural turnaround . Additionally, the index broke out of an eight -month falling trendline and surpassed its lifetime high, indicating robust structure .

* In tandem with the benchmark index, the Nifty PSU Bank index is witnessing breather near the upper end of the 10 months falling channel (joining the highs of June & Dec -24), following the sharp up -move of ~16 % in 9 trading sessions . The ongoing breather can be seen as a healthy pause after recent up move . Moving forward, we expect the PSU Bank index to regain momentum and break higher, surpassing the December 2024 high of 7200 .

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