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Nifty : 23869

Technical Outlook

Day that was ..

• Equity benchmark extended its losing streak for fourth consecutive session down 0.5% at 23,869 amid escalating geopolitical tension and resultant flare up in crude oil prices weighed global sentiment. Market breadth remained negative with an (A/D) of 2:1. Broader markets relatively underperformed the benchmark with both Nifty Mid and Smallcap indices lost 1% each. Baring Auto, all other major sectors closed in red with BFSI, Realty and Oil & gas were the top losers.

Technical Outlook :

• Nifty opened the session with a gap-down, however after initial recovery it faced selling pressure emerging near the 50-day EMA (23988). The daily price action resulted into bearish candle with lower high-low structure, indicating corrective bias.

• Index likely to open gap-down on back of geopolitical developments and rise in brent crude prices .The recent up move in crude oil prices has resulted into extended correction in the Nifty consequently breaching 1-month rising trendline, indicating a pause in current upward momentum. Notably, the lack of follow-through strength resulted into prolongation of consolidation in 24200-23600 zone over past six weeks. Only breach of three months rising trend line placed at 23600, would result in extended correction towards 23300 zone.

• Going ahead, global macroeconomic trends will remain the primary driver of market direction. Amid persistent geopolitical tensions, crude oil dynamics and the Indian Rupee are the key variables to track. A pull-back in crude oil along with rupee stabilization will provide cushion for the Nifty.

• Structurally, the Nifty has been consolidating within a 1,500-point over the past quarter. Defending the pivotal 23,000 mark is crucial to establish a higher base, which would set the groundwork for the next leg of the secular uptrend

• In the process, bouts of volatility to remain elevated as we enter the Q1FY27 earning season. Hence, focus should be on accumulating stocks on dips backed by strong earnings as key support is placed around 23600 levels as it is 61.8% retracement of June-July rally (23072-24530) coinciding with the gap area seen during 15th June.

Key Monitorable :

• Historical data of Brent crude oil suggest that bounce after a sharp decline in amid geopolitical conflict (Iraq war 1990-91, RussiaUkraine 2022) typically cap around 40%. In the current scenario, Crude has rallied 37% from recent low of $70.

• Empirically, after such a bounce crude undergoes consolidation and eventually revisits the panic low in subsequent quarters. Therefore, we believe falling crude oil would be the primary catalyst to reignite momentum in equities

Intraday Rational :

• Trend – Lower high-low structure for in daily time-frame, indicating corrective bias

• Levels – Sell around 61.8% retracement of yesterday range

Nifty Bank : 56592

Technical Outlook

Day that was :

Bank Nifty closed on negative note down 0.94% at 56592 levels on back of mixed global cues and rise in brent crude prices.

Technical Outlook :

• After negative opening index remained southward most part of the day as intraday pullback were short lived. Consequently, the daily price action resulted into bear candle with lower high lower low and settled below 20-day EMA indicating extended breather.

• The lack of follow-through strength resulted into prolongation of consolidation in 56000-58000 zone over past six weeks. Going ahead 56000 will be key level to watch out for , a decisive close below this level would lead to extended correction towards 55500 support. The 38.2% retracement of entire rally (49954-58706) and gap-area is placed around 55,500 levels.

• Another observation is that over last 3 weeks Index has retraced by 38.2% of earlier 3 weeks rally, indicating slower pace of retracement which would help to set stage for next leg of rally.

• PSU Bank Index over past 3 months has formed higher base above its 52-week EMA. We expect corrective phase to anchor around lower band of consolidation placed in the region of 8000-7800

• Intra day Rational :

• Trend - Lower high-low structure in daily time-frame, indicating corrective bias.

• Levels : Sell around 61.8% retracement of yesterday range

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