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Nifty :26032

Technical Outlook

Day that was…

Indian equity benchmarks ended lower on the weekly expiry day, weighed down by profit-booking and continued pressure from a record-low rupee. The Nifty closed at 26,032, down 0.45%, while the broader market remained subdued with the Nifty Midcap index slipping 0.22%. Sectoral performance was broadly negative, with Pharma emerging as the lone outperformer.

Technical Outlook :

* Nifty opened with a gap down and faced sustained profit-booking throughout the session. The daily price action formed a bearish candle with a lower-high, lower-low structure, signalling ongoing short-term exhaustion.

* A key observation is that, after hitting fresh all-time highs, the index is undergoing a healthy two-session profit-booking phase, retracing back towards its immediate support zone near the 20-day EMA at ~25,950, which aligns with the trendline support around 25,900, offering a strong confluence of support. Despite the near-term pullback, the weekly chart structure remains constructive, with the index firmly maintaining its higher-high, higher-low formation. Going forward, a decisive close above the previous session’s high of 26,154 would signal a pause in the current corrective move. Failure to surpass this level could keep the index in a consolidation range between (26300-25600) in the near term.

* In the process, volatility would prevail tracking global development. Hence, dips should be capitalized as incremental buying opportunity in quality stocks backed by Q2 earning`s as strong support is placed at 25600 being 61.8% retracement of Sept-Oct rally (24588-26104) coinciding with 50 days EMA.

Following observations makes us reiterate our positive stance:

* Following the strong up move in Bank Nifty and Midcap index, Nifty clocked a fresh all-time high, while Nifty 500 which carries 90% market cap is trading below just 2.5% from its peak. We expect, catch up activity to gradually pan out in the broader market space in coming weeks.

* Relative outperformance of Indian market is visible as defying the global trend Nifty gained 1.9% in the month of November while US and European markets recovered losses and settled the month on a flat note, while Nikkei fell about 4%

* December Seasonality: Historical data exhibit that seasonality favour bulls with ~70% success rate wherein average returns have been to the tune of 2.5%

* Sector in focus: We expect BFSI, auto to continue with its outperformance while favourable outcome of US-India trade deal could revive traction in IT, pharma, Textile

Key Monitorable for the next week:

* US and India Tarde Deal: Anticipation of nearing closure of the US and India trade deal continued to buoy sentiment. A favourable outcome could accelerate the positive momentum and attract renewed FII’s inflow.

* RBI Policy

* Brent Crude Oil: Brent Crude: Expect Brent crude to extend decline and head towards lower band of past seven months consolidation range 75-58

* Indian Rupee: Indian Rupee has depreciated and trading around 89.40. Further decline in rupee could temper market sentiment

* Intraday Rational:

* Trend- Lower-high lower-low structure retraced back to 20-day EMA key support coinciding with rising channel support

* Levels: Buy around last Wednesday gap-area (26085)

Nifty Bank : 59273

Technical Outlook

Day that was:

Bank Nifty declined for the second straight session, settling at 59,273, down 0.68%. In contrast, the Nifty PSU Bank index showed relative resilience with a mild decline of 0.25%

Technical Outlook:

* The index opened with a negative gap and, despite an initial rebound, faced renewed selling pressure near the previous session’s low. This dragged the index below its intraday low, leading to a close near the day’s bottom. Consequently, the daily price action formed a bearish candle with a prominent upper shadow, indicating persistent supply at higher levels.

* Bank Nifty continues to undergo a healthy retracement following a sharp two-week rally of nearly 2,950 points, which pushed the Stochastic indicator into overbought territory on the monthly time frame. The current sideways-to-downward corrective structure has brought the index closer to its previous swing low (58900), which aligns with the 20-day EMA, creating a strong confluence of support Given this backdrop, traders are advised to avoid aggressive long positions at elevated levels. Instead, a buy-on-dips approach is preferred to accumulate fundamentally strong banking names, particularly those that delivered robust Q2 earnings. Immediate support is placed near 58,600, which also coincides with the 50% retracement of the recent upmove from (57157-60114)

* Historically, in the past two decades, there have been 17 instances where Bank Nifty delivered double-digit gains within four months after a decisive breakout above its previous two-month high. The current structure has once again confirmed such a breakout surpassing both the prior two-month high and the previous all-time peak (57,628), indicating a high-probability continuation setup for sustained upside momentum in the months ahead..

* The PSU Bank Index has been a notable outperformer, maintaining a 13-week higher-high, higher-low formation amid strong Q2 earnings, rallying ~1,850 points (+27%). The steep run-up has pushed stochastic indicators into overbought territory on weekly and monthly charts, raising odds of a near-term consolidation. Nevertheless, pullbacks should be viewed as accumulation opportunities, with strong support around 7,900, aligning with the 38.2% retracement of the 6,730–8,665 rally and the 50-day EMA.

* Intraday Rational:

* Trend- Higher-high and Higher-low pattern for three-consecutive week.

* Levels Buy on declines near 61.8% retracement of last 2 days move (59265-60353

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