IGI Logo

Nifty :24167 

Technical Outlook

Day that was…

Indian equity benchmarks continued their winning streak for the sixth consecutive session backed by FII’s buying spree over fifth session in a row, with the Nifty closing at 24,167, up by 41 points. Market breadth remained strong, with an Advance/Decline ratio of 2:1, as the broader market outperformed. The Midcap and Small cap indices closed on a positive note, each gaining ~0.75%. Barring IT and Oil & Gas, all sectoral indices ended in the green. Realty, FMCG, and Consumer Durables emerged as the top outperformers.

Technical Outlook:

* The Nifty opened with a gap-up in the range of 24,125–24,185, after filling the previous gap, where buying demand re-emerged. Minor profit booking occurred near the 80% retracement level of the decline from 24,857 to 21,743, leading the index to close near its opening level. Consequently, the daily price action formed a Doji candle, indicating a breather after a sharp 2,500-point rally

* The benchmark index is opening gap-up tracking strong global cues after President Donald Trump’s comment on Fed Chair Powell and on China. Key point to highlight is that the Nifty revisited its January 2025 highs for the first time and posted its highest close since January 3 rd , reflecting inherent market strength. Looking ahead, we reiterate our positive outlook and expect the Nifty to move towards 24,500 — the 61.80% retracement of the decline from 26,277 to 21,743. Further reinforcing our bullish stance is the improving market breadth — 80% of Nifty 500 stocks are now trading above their 50-day SMA, and 33% are above their 200-day SMA, a significant rise from the bearish extremes observed last month. The formation of higher highs and higher lows signals continued upward momentum, prompting us to revise the support base upward to 23,300. The Nifty has rallied 11% over the past two weeks, which has pulled the daily stochastic oscillator into the overbought territory. While a temporary breather at higher levels cannot be ruled out, such consolidation should not be seen as negative. Rather, it presents an opportunity to accumulate quality stocks during the ongoing earnings season. A “buy-on-dips” strategy is advisable, with a focus on domestic themes over global ones.

* Since 2002, within structural bull markets, intermediate corrections have typically been limited to 18% (excluding 2004 and 2006). These corrections have lasted, on average, 8–9 months. In the current cycle, the Nifty has rebounded strongly after a 17% correction over seven months. Historically, such rebounds have delivered an average return of 23% over the subsequent 12 months.

* Our positive bias is further validated by following observations:

* a) Despite global volatility, the Banking index closed above its December highs and is now forming a higher base, signaling relative outperformance and setting the stage for a potential move towards 56,000.

* b) The US Dollar Index broke down below the two-year low of 99.50.

* c) Brent crude is stabilizing around $67 after rebounding from $58

* d) The S&P 500 VIX has sharply declined after peaking at 60, suggesting easing concerns around tariff uncertainty.

* Mirroring the benchmark move, Nifty midcap and small cap indices have staged a strong rebound after retesting multi-year resistance trend line. Historically, maximum average correction in Midcap and small cap indices have been to the tune of 27% and 29% while time wise such correction lasted for 5 months. Subsequently, both indices have seen 28% returns in next six months.

* We expect volatility to prevail amid ongoing global uncertainty, However, with the strong rebound in prices we revise our support base at 23300 which is 50% retracement of the move from (21743-24857).

Nifty Bank : 55647

Technical Outlook

Day that was :

The Bank Nifty index extended gains for the six consecutive session, where it settled Tuesday’s trading session on a positive note at 55647 , up by 0 .62 % . Meanwhile, the Nifty PSU Bank index outperformed the benchmark where it settled the day on a positive note at 6734 , up by 0 .75 %

Technical Outlook :

* The Bank Nifty opened the day on a flat note and witnessed buying demand in the first half of the session . However, the index encountered rejection at the psychological mark of 56000 and gave up mare than 50 % of its intraday gains, indicating minor profit booking at higher level . The price action resulted in a small bull candle with long upper wick, indicating dwindling upward momentum .

* Key point to highlight is that, the Bank Nifty witnessed faster pace of retracement where it regained previous 6 months decline in less than 2 months, indicating structural turnaround . In the process, the index broke out of an eight -month falling trendline and surpassed its lifetime high, where it witnessed a sharp up move of ~6800 points in last 9 trading sessions . However , the weekly stochastic oscillator has entered into overbought zone, suggesting that the short -term pullback cannot be ruled out . Going ahead, the index needs to close above the psychological mark of 56000 which is also 123 % external retracement of the previous fall (54467 -47702), for further upside . On the other hand, the mark of 54300 will provide immediate support on the downside being 61 . 8 % retracement of recent up - move (53085 -55961 ) .

* Structurally, the Bank Nifty is showing resilience as compared to the benchmark as it witnessed a strongest candle in last month post Jun -24 , and is now witnessing a follow through buying demand in current month where it breached its all time high on a closing basis, indicating revival in upward momentum .

* In tandem with the benchmark index, the Nifty PSU Bank index continued its bullish momentum for fourth consecutive day, indicating structural strength . Key point to highlight is that, the index broke out of its 3 months inverse Head & Shoulder pattern formation and is now witnessing a follow up demand, indicating bullish reversal . Additionally, the index witnessed hammer like candle on quarterly chart and is now witnessing a follow -through buying, indicating structural turnaround . Going ahead, we believe that the Nifty PSU Bank will outperform the benchmark where the immediate upside is placed at 6900 , being 80 % retracement of the previous decline (7248 -5530 ) .

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

SEBI Registration number INZ000183631