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Nifty : 24246

Technical Outlook

Day that was…

Indian equity benchmarks concluded the monthly expiry on a subdued note, with the Nifty closing at 24,246, down by 82 points. Sectorally, Realty, FMCG and Consumer Durables were the laggards, whereas, Pharma, Healthcare and Metal were outperformers.

Technical Outlook:

* The Nifty opened on a positive note but failed to surpass the previous session’s high, leading to a narrow trading range of 65 points throughout the day. Consequently, the daily price action formed an Inside Bar, indicating range-bound action.

* Nifty witnessing gap-up opening amid positive global cues. Key point to highlight is that in current scenario, index has rallied 12% over past eleven sessions that hauled daily stochastic oscillator in overbought conditions and is now witnessing a breather. Despite today’s decline, the index continues to form higher-high-low formation, indicating that the bias is still positive. A decisive close below the previous sessions low would confirm the extended breather. However, such breather should not be construed as negative, instead utilized to accumulate quality stocks with strong earnings as we expect index to gradually form a higher base and eventually surpass 24500 mark which is 61.80% retracement of the decline from 26,277 to 21,743. Meanwhile, 23,300 would continue to act as key support.

* 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, indicating price and time maturity. In addition to that, monthly momentum indicator, breadth and sentiment indicators, and the faster pace of retracement collectively reinforce the view that a durable bottom is in place. Any near-term dip is likely to form a higher base, offering a constructive setup for accumulation. In the process, stock specific action would prevail onset of J&K terror attack, tariff related development and Q4 earning season. Hence, focus should be on accumulating quality stocks to build a medium-term portfolio.

* On the broader market front, we witnessed a breather in the Nifty Midcap and Small Cap indices, post the strong pullback of 18% and 21%. Notably, the Small Cap index has reclaimed its 200-day EMA, signaling structural strength.

* 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 : 55201

Technical Outlook

Day that was :

The Bank Nifty snapped extended breather from the previous session and settled the day on a negative note at 55201 . 4 , down by 0 .30 % . Meanwhile, the Nifty PSU Bank index outperformed the benchmark where it settled the day on a negative note at 6685 , down by 0 .16 %

Technical Outlook :

* The Bank Nifty witnessed gap -down opening and witnessed rangebound action throughout the day . The price action resulted in a small bull candle with long upper wick, indicating extended breather post sharp up -move .

* Key point to highlight is that, in line with our expectation the Bank Nifty encountered resistance at the psychological mark of 56000 , after sharp up -move of 14 % in 10 trading sessions, post which it is now observing breather since last two trading sessions . On the oscillator front, the weekly stochastic has entered into overbought zone, suggesting a pullback in near term cannot be ruled out . Despite last two days decline the index has managed to close above the previous days low, indicating that the bias is still positive and only a decisive close below previous sessions low will confirm the short -term breather . 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 ) . However, any dip from hereon should be capitalized as buying opportunity in quality stock in staggered manner .

* Structurally, the Bank Nifty is showing resilience as compared to the benchmark as it witnessed faster pace of retracement where it regained previous 6 months of decline in less than 2 months, indicating structural turnaround . Additionally, the index broke out of an eight -month falling trendline and surpassed its lifetime high, indicating robust structure .

* In tandem with the benchmark index, the Nifty PSU Bank index is witnessing breather near the upper end of the 10 months falling channel (joining the highs of June & Dec -24), following the sharp up - move of ~16 % in 9 trading sessions . The ongoing breather can be seen as a healthy pause after recent up move . Moving forward, we expect the PSU Bank index to regain momentum and break higher, surpassing the December 2024 high of 7200 .

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