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Nifty : 23854

Technical Outlook

Day that was .. Equity benchmark extended gains over second consecutive session tracking US- Iran peace deal framework, decline in crude oil prices and appreciation in rupee. Nifty settled the Monday’s session at 23854, up 1%. Broader market performed in tandem with the benchmark. Sectorally, barring pharma, all major indices ended in green led by auto, realty, Consumer durables.

Technical Outlook :

• Nifty started the week with a positive gap. However, pared initial gains as minor profit booking emerged from psychological mark of 24000. Consequently, daily price action formed a small bodied bear candle carrying gap below it, indicating continuation of uptrend .

• Index logged a resolute breakout from four months falling trend line, indicating conclusion of corrective phase that open the door for Nifty to head towards 24500 in the coming weeks.

• Structurally, off Apr-26 peak, the index underwent a slower pace of retracement wherein it retraced 61.8% of April rally (11%). However, it is important to highlight that this corrective phase has been captured in a downward sloping contracting triangle pattern wherein after each ~4% correction index retraced 61.8% to 80% in subsequent 8-9 days.

• In current scenario, index retraced more than 90% of last 11 sessions 4% decline in just three sessions, highlighting potential faster pace of retracement. This structural improvement makes us believe, the index has absorbed host of negativity around geopolitical conflict and formed a stage for next leg of up move. Hence any decline should be used as incremental buying opportunity as strong support is placed at 23100. Our Constructive bias is based on following observation :

• The current positive development on geopolitical de-escalation front would result into further decline in Crude oil prices. This would be the key catalyst for Nifty for next leg of up move

• Bank Nifty has done the heavy lifting, as RBI amendments fueled the momentum, resulting into breakout from two month falling trend line which would drive Bank Nifty towards 57800 in coming weeks

• Nifty midcap has taken a breather after clocking fresh high. Post earning revival is expected to trigger healthy catch up in small cap index which is still 9% away from All Time high

Key Monitorable :

a) US Fed Policy

b) IIP Data

c) Crude Oil: Brent crude is trading at two months low below $85 mark. Confirmation of geopolitical de-escalation will result into further cool-off in oil prices, boosting Indian equities market Intraday Rational :

• Trend – Breakout from 4-months falling trendline, indicating conclusion of corrective phase

• Levels – Buy around 80% retracement of last sessions up move

Nifty Bank : 57198

Technical Outlook

Day that was : Bank Nifty Index ended the day on positive note up 0.7% at 57198 on back of optimism of trade deal news. Nifty PSU Bank remained in uptrend gaining 0.6%.

Technical Outlook :

• BankNifty post gap-up opening remained sideways in first half and gave some part of gains in last hour of trade. The daily price action resulted into small bear candle carrying positive gap, indicating positive bias

• On expected line BankNifty achieved our target 57800 levels and witnessed profit booking from those levels. Going forward we expect bias to remain positive and Index to gradually head towards target of 59300 levels in coming month as it is 80% retracement of Feb26-April26 decline

• Structurally, index has broken out of four months falling trend line, indicating conclusion of corrective bias that opens the door for next leg of up move. The formation of higher high-low on the weekly chart makes us revise support upward towards 55000 levels being 61.8% retracement of current up move coinciding with 50-day EMA.

• Mirroring the benchmark, PSU Bank Index logged a resolute breakout from four months falling trend line, signifying resumption of uptrend. Structurally Index has formed higher base above 52-week EMA over past four weeks. Going ahead we expect Index to regain momentum and head towards 8800 levels being 80% retracement of current decline(9095-7800)

Intraday Rational :

• Trend - Index has breached above its previous swing high (57400), indicating inherent strength

• Levels - Buy around 80% retracement

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