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Nifty : 22776

Technical Outlook

Day that was ..

The equity benchmark extended its recovery for a second consecutive session, gaining 220 points or 1% to close Tuesday's expiry at 22,776. Broad market participation remained constructive with A/D ratio of 2:1 as the Nifty Midcap and Smallcap indices advanced 1% and 1.6% respectively. Sectorally, Healthcare and FMCG acted as primary growth drivers, whereas the IT and Realty segments experienced minor profit booking.

Technical Outlook :

• Following a steady opening and index extended gains as intraday dips were bought into, resulting into sizable bull candle, indicating continuation of upward momentum.

• Tuesday’s price action confirmed a breakout above a downwardsloping trendline, with bulls successfully clearing and sustaining above the previous session's high (of 22,622) for the first time after a multisession corrective spell. The recovery originating from the October 1 low of 22,217 has yielded a 550-point advance, marking the strongest structural pullback observed when compared to the preceding 2 relief rallies off August highs of 24774.

• We believe the Nifty has registered a crucial technical bounce from extreme oversold zones. While the structural trend remains watchful after an extended eight-week consecutive decline, the cooling down of immediate downward velocity favors risk-reward for large-caps ahead of the Q2 corporate earnings cycle. Investors should continue to selectively accumulate high-quality large-cap names in a staggered manner. Further sustainability and a decisive close above the 23,100 (previous week high) will signal a meaningful trend reversal.

• The preceding extended multi-week consecutive decline represented a rare and significant technical overstretch. This deep correction, coupled with severely oversold conditions across major momentum and breadth indicators, strongly suggested that the market was due for the ongoing technical pullback.

• The daily RSI (now at ~36) has bounced slightly from its extreme oversold zone of 22–23, while key stochastic indicators are attempting a bullish cross in deeply oversold territory, flashing a clear technical signal that downward velocity is temporarily cooling off.

• Broad market breadth showed signs of stabilization, as a stretched market condition slowly reverses, increasing the overall likelihood and sustainability of a comprehensive technical rebound across the Nifty 500 constituents

Key Monitorables

• RBI MPC Interest Rate Announcement (Wednesday)

• Kick-off of Q2 Corporate Earnings Season

• US 10-Year Treasury Yields ,Brent Crude Trajectory

Intraday Rational :

Trend – Supportive efforts from April lows.

Levels – Buy around 61.8% retracement of 3 days range

Nifty Bank : 55128

Technical Outlook

Day that was :

Bank Nifty ended the day on positive note, at 55128 up 0.76% on back of positive business updates from index heavyweights and ahead of key event.

Technical Outlook :

• Bank Nifty started the day with positive opening and inched northward till previous session high around 55200. The daily price action formed a bull candle with higher high higher low indicating positive bias.

• Going forward follow through strength beyond 55400 (being last weeks high) would confirm resumption of uptrend and open door towards 56400-56600 levels being 61.8% retracement of current decline(58025- 53785) and 200-day EMA.

• Failure to do so would result into extended correction wherein strong support is placed around crucial support area of 53300 levels being 61.80% retracement of Apr-Jun rally (49955-58706).

• Among oscillators, weekly stochastics is placed at 21 levels rebounding from oversold territory indicating impending pullback.

• The PSU Bank Index closed flat for the day, largely Inside bar within previous session high low range indicating breather. Going ahead, support is placed at the lower band of past five months consolidation (9095-7809). While oversold placement of daily and weekly stochastic oscillator warrant for selling exhaustion in coming weeks.

• Intraday Rational :

• Trend - High wave candle at key retracement support

• Levels: Buy around 50% retracement of 2 days range and Mondays low

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