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Nifty : 23146

Technical Outlook

Week that was ..

In the face of global volatility, the Nifty made a robust rebound, propelled by its heavyweights, closing the week at 23,146 with a gain of 2.8%. While this strong performance was evident, the midcap and small-cap indices lagged behind, rising only 0.6% and -0.2%, respectively. The IT sector, which had been underperforming, staged an impressive comeback, gaining 12% following the earnings of its heavyweights and profit-taking in AI-driven, and private banking sectors. Conversely, Pharma, FMCG extended breather.

Technical Outlook :

• Despite subdued opening, Nifty managed to hold the long-term 200-week EMA for the third consecutive week and experienced a strong rebound settling above the key resistance of 23100 mark, supported by renewed momentum in IT, private banks, and telecom sectors, collectively comprising more than 50% of the Nifty's weightage. This resulted in the formation of a Morning Star candlestick pattern at the 200-week EMA, indicating the end of an eight-week corrective phase.

• With >950 points strong recovery, index maintained the rhythm of reversing course after eight weeks losing streak and logged breakout from two months falling trendline wherein last two weeks decline recouped in just a single week. This structural improvement signals extension of rally toward 23,500 in upcoming weeks. Meanwhile, support base is revised upward at 22500 being 61.8% retracement of current up move (22180-23150)

• On a macro perspective, the U.S. announcement to lift penalties on major Russian energy purchasers, which could involve tariffs up to 100%has a positive outlook for the Indian market

• On the sectoral front, the ratio chart of the Nifty Private Bank Index compared to the overall Nifty broke out of a five-year downward channel, while the Nifty IT Index ratio chart logged a breakout from a six-month inverted head-andshoulders pattern. These improvements suggest relative outperformance in these sectors moving forward.

• The Indian market had lagged its global counterparts due to AI-driven momentum. However, the recent sell-off in global AI-driven stocks, fuelled by concerns about Fed interest rate hikes and financing of AI investments, could serve as a supportive tailwind for the growth-oriented Indian market, potentially attracting FII’s in the near future.

• Looking ahead, volatility is expected to remain elevated ahead of US Midterm elections. In the process, a key level of support for the Nifty is placed at its recent panic low of 22,200, coinciding with the 200-week EMA at 22,380. Therefore, maintaining a stock-centric approach and focusing on companies with strong earnings remains crucial. Only a breach below 22200 would lead to extended correction.

• Unlike the benchmark, the broader market showed limited participation and failed to close above its previous week’s high. For the sustainability of the current rally, broader market participation will be essential. Midcap and small cap index closing decisively above the previous week’s high would be the first indication of broadening of rally

Key Monitorables

• Heavyweight earnings releases

• US Midterm Elections

• Developments in geopolitical affairs

• Brent Crude prices and US 10-Year Treasury yields

Intraday Rational :

Trend – Close above 20-day EMA, signifies revival in uptrend

Levels – Buy around 61.8% retracement of Frdays range

Nifty Bank : 55844

Technical Outlook

Week that was :

Bank Nifty ended the week higher up 1.06% at 55844, supported by mixed global cues. However, the Nifty private bank index outperformed, gaining 1.7% for the week.

Technical Outlook :

• The index opened the week on flat note and continued its northward journey, forming a higher-high and higher-low structure. Intraday declines attracted buying interest. The weekly price action formed is bull candle with higher high higher low, indicating positive bias.

• Index has witnessed breakout above 54400 levels being last 2 weeks high and closed above previous session high after 5 weeks decline indicating acceleration of upward momentum. A sustained move above current levels could pave the way for a gradual recovery towards the 56,400–56,500 zone, coinciding with the 61.8% Fibonacci retracement of the recent decline and the 200-day EMA.

• Key point to highlight is that, the ratio chart of Nifty Private Bank vs Nifty has broken out of five years falling channel that augurs well for relative outperformance going ahead which would help Bank Nifty to extend its rally in the coming month

• The immediate support is placed around 54,700, corresponding to the 61.8% retracement of the recent upmove from 53,785 to 56065. The broader weekly structure remains constructive, with the index continuing to maintain a higher-high and higher-low formation.

• NiftyPSU Bank Index is consolidating in vicinity of 52-week EMA maintaining higher high higher low indicating positive momentum.

• Among oscillators, weekly stochastics is placed at ~36 levels rebounding from oversold territory indicating impending pullback.

Intraday Rational :

• Trend - Close above 20-day EMA, indicating conclusion of corrective bias

• Levels: Buy around 61.8% of 2 days range

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