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Nifty :23519

Week Outlook

Day that was… 

Indian equities snapped their five-month corrective phase (longest-ever losing streak in three decades) and settled a volatile week on a positive note, with the Nifty closing at 23,519, up 168 points. In the process, broader market underperformed. Sectorally, PSU Bank, Financial Services and Nifty bank remained at the forefront, while Pharma, Auto and Realty were the laggards on weekly basis.

Technical Outlook:

* The Nifty opened the week with a gap-up (23350-23515) leading it towards 23800, where it encountered profit booking. As a result, the weekly price action formed a Doji candle, indicating profit booking at higher levels after a sharp up-move.

* Nifty is likely to witness gap down opening tracking elevated volatility owing to Tariff related uncertainty. The Nifty has staged a strongest up move since September 2024 that has helped index to log a resolute breakout from six months falling trendline, indicating end of corrective phase. Key point to highlight is that, the recent up move is backed by the faster pace of retracement along with regaining of momentum, indicating structural turnaround. However, sustainable move above the recent high of 23800 is required for the next leg of upside. Going ahead, we expect the index to form a higher base and consolidate in the broader range of 23800-22800, where bouts of volatility will prevail amid, US tariff announcement coupled with the upcoming earnings season with stock specific action likely to continue.

* Structurally, after a steep 16% correction over the last five months, market sentiment and momentum indicators have rebounded from bearish extremes. The percentage of stocks trading above their 50-day SMA surged from 7% to over 50% in Friday’s session, highlighting a strong improvement in breadth. The index also retraced its previous 19-session decline in just 14 sessions, confirming a faster pace of retracement. After a ~1,900-point rally, the Nifty faced resistance at 23800, coinciding with 61.8% retracement of previous fall (24858-21964). Any pullback should be considered a healthy retracement, allowing the index to form a higher base. Given the ongoing US tariff-related developments, volatility will prevail, making a buy-on-dips strategy more prudent. On the downside, 23,000-22800 remains a strong psychological support. Hence, the focus should be on accumulating quality stocks with a medium-term perspective. Our constructive bias is validated by following observations:

* a. FIIs have extended their buying spree for six consecutive sessions, marking their longest buying streak in six months and closed positive for March month (+2014.18) after five straight months of negative flows, signaling a return of institutional buying interest.

* b. The ratio chart of Nifty/Dow Jones has recorded a breakout from a six-month falling channel, suggesting that the domestic market could relatively outperform US equities going forward.

* On the broader market front, Nifty Midcap and Small cap indices have seen a rebound after approaching maturity of price and time wise correction. 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 five months. Subsequently, both indices have seen 28% returns in next six months.

* Formation of higher peak and trough indicates buying demand at elevated support base, which makes us revise the support levels at 23,000-22800, which represents a 50% retracement of the current upmove (21,965–23,869). This level is expected to act as a strong cushion, ensuring that dips remain buying opportunities rather than trend reversals.

Nifty Bank : 51565

Technical Outlook

Day that was :

The Bank Nifty snapped its five months corrective phase and closed the monthly expiry on a positive note where it settled the volatile week at 51565 , up by 1 .92 % . Both the Nifty PVT Bank and the Nifty PSU Banking index contributed to the benchmarks move, where it closed the week with the gains of 1 .98 % and 2 .16 % respectively .

Technical Outlook :

* The Bank Nifty opened the week on a positive note, however the index witnessed a range bound action throughout the week where it traded within a range if 1200 points with a higher high -low formation . The price action resulted in a small bull candle with long upper wick, indicating slowdown to the upward momentum .

* Key point to highlight is that, the index witnessed a double bottom formation around the multi support mark of 47800 and observed a faster pace of up -move where it regained previous two months of losses in a single month, indicating structural turnaround . Following the sharp up -move of ~ 9 % the index is now witnessing a breather, where the daily stochastic oscillator tilted downward from the overbought zone, indication a pause in upward momentum . Going ahead, the ongoing pullback should be viewed as a healthy retracement and capitalized as buying opportunity as we expect the index to form higher base and eventually head towards the mark of 52500 being 80 % retracement mark of the previous fall (53888 - 47703 ) . However, bouts of volatility would prevail in the backdrop of looming US tariff announcement . Hence, buying on dips would be the prudent strategy to adopt with the strong support placed around 50200 mark

* Structurally, the Bank Nifty bounced from the vicinity of 100 -week EMA after forming a double bottom pattern . Additionally, the swift up move in banking space helped Bank Nifty to surpass past two months high, suggesting inherent strength . The current up move of 9 % is strongest since September that confirms resumption of uptrend . As a result, previous five -month “sell -on -rally” approach has now shifted to a “buy -on -dips” strategy as sentiment has improved .

* In tandem with the benchmark index, the Nifty PSU Bank index witnessed a range bound action where it traded within a range of ~250 points throughout the week . The price action resulted in a small bull candle with long shadows, indicating structural strength amid high volatility . Key point to highlight is that, the PSU Bank regained more than 90 % of its previous month losses with a higher high -low formation after nine months of corrective bias, indicating structural turn around . Going ahead, we expect the index to continue its upward momentum and head towards the mark of 6600 being 61 . 8 % retracement of the previous fall (7248 -5530 ) . On the other hand, the mark of 6000 will provide immediate support being 50 % retracement of recent up -move(5530 -6366 ) .

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