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Nifty : 24583

Technical Outlook

Day that was ..

Equity benchmark concluded the session on a flat note amid continued geopolitical uncertainty and volatile crude oil prices. Nifty settled the day at 24583, up ~13 points, while in broader market Nifty Midcap relatively outperformed the benchmark and clinched a fresh all-time high gaining 0.6%. On the sectoral front Realty, Metals, BFSI were the top gainers while PSUs banks, Oil&Gas, Pharma were the losers.

Technical Outlook :

• Nifty started the week on a flat note and oscillated in ~110 points for the remaining session. Consequently, the daily price action has resulted into “Doji-like candle” indicating indecision and lack of follow through in either direction.

• Over the past five sessions, the Nifty index has retraced only 23.6% of its prior six-session 1,150-point upmove. This shallow pullback shows a healthy consolidation after a sharp rally.

• Nifty also holds a strong higher base above its 200-day EMA and hovers near the key 24,600 breakout zone from a four-month consolidation. Furthermore, the formation of higher peak and trough along with ongoing sector rotation signifies broadening of rally that bodes well for eventual breakout from consolidation and open the door for milestone of 25000 in coming weeks. Eventually, we expect Nifty to extend this move and head towards 25500 in coming months. Our positive bias remains intact as long as key support threshold of 24000 is held

Our constructive stance is based on following observations :

I. Over past three decades there have been 8 occasions where Nifty has remained below its 200 days EMA for at least four months. The subsequent move, after reclaiming its 200 days EMA has been noteworthy as it delivered average returns of 12% to 19% over the next 3 to 6 months. In the current scenario, the index has reclaimed its 200-day EMA after four months consolidation, History strongly favours the bull

II. Following the Midcap move, Nifty smallcap index reclaimed its all-time high after 20 Months. The breakout from 8 years falling trend line on the ratio chart of Nifty smallcap / Nifty augurs well for acceleration of upward momentum

III. The index is at the cusp of 4 months consolidation breakout. But this breakout looks imminent as market breadth has seen significant improvement since then. Currently 56% of stocks of Nifty 500 universe are trading above their 200 days SMA compared to April swing high of 41%

IV. After 13 months relentless FII’s outflow, selling pressure is finally waning. FII’s turned into a net buyer worth Rs. 2400 cr. To kick start the August month

Key Monitorable :

a) US and India Inflation Print

b) Positive development on Geopolitical front

c) Falling crude oil prices

Intraday Rational :

• Trend – Over the past five sessions, the Nifty index has retraced only 23.6% of its prior six-session 1,150-point upmove, signals positive bias.

• Levels – Buy around 80% retracement of last 4 days range

Nifty Bank : 57687

Technical Outlook

Day that was :

Bank Nifty ended the day on flat note at 57687 on back of mixed global cues.

Te chnical Outlook :

• Index started the week on a flat note and breached previous session low and ended lower at 57687 levels. As a result, the daily price action has resulted into high wave like candle with shadows on both the sides indicating elevated volatility.

• Index has been consolidating above 20-day EMA around 57500 levels and now resumed uptrend after 2 days breather indicating positive momentum. Going ahead we expect, index to resolve out of one month consolidation range where upper band is placed at 58500 and open the door for next leg of up move towards 60000. The key support zone of 57000 is a placement of the 50-day EMA coinciding with 50% retracement of recent rally (56024- 58248) and four months rising trend line

• Another observation is that over last 6 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.

• The PSU Bank Index seen profit booking after 7 sessions rally. Current breather should be used as incremental buying opportunity. Going ahead follow through strength above last week week(8870) high would set the stage towards 9100 levels

Intraday Rational :

• Trend - Prolongation of consolidation in vicinity of 57500, indicating positive bias

• Levels: Buy around 80% retracement of last 4 days range

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