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Nifty : 21840

Day that was…

Equity benchmarks extended gains over third consecutive session tracking firm global cues. The Nifty gained 70 points or 0.3% to settle the session at 21910. The market breadth remained positive with A/D ratio of 2:1 as broader market relatively outperformed. Sectorally, Oil & Gas, PSU Banks, auto outshone while FMCG, pharma relatively underperformed

Technical Outlook

• The index recouped initial losses and gradually witnessed range bound activity. As a result, daily price action formed a small bull candle, indicating follow through strength. Meanwhile, shadows on either side signifies rise in volatility

• The index has resumed uptrend after undergoing slower pace of retracement above 50 days EMA, highlighting inherent strength that makes us confident to reiterate our positive stance and expect index to challenge the life highs of 22124 in the coming month. In the process, bouts of volatility owing to global development would offer incremental buying opportunity. Thereby, we advise to adopt buy on dips strategy which has been faring well.

• Structurally, over past eight sessions Nifty retraced 61.8% of preceding seven sessions up move (21137–22126), indicating slower pace of retracement. The bottom up approach of Nifty 50 component highlights robust price structure that bodes well for next leg of up move.

• Despite host of negative news index has managed to hold 50 days EMA and undergone base formation that makes us confident to revise support base at 21400 as it is confluence of:

A. 50% retracement of mid Dec-Jan rally (20508-22124)

B. Past three week’s low is placed at 21430 C. 50 days EMA is placed at 21385

Nifty Bank: 46218

Day that was :

The Nifty Bank staged late recovery on Thursday led by large private and public banks . Index settled the session at 46218 , up 310 points or and settled at 45908 , up 310 points or 0 .68 . PSU Banking index continued outperformance with gain of 3 % to hit fresh life high

Technical Outlook :

• The index consolidated in a narrow range in first hour and then gradually headed higher resulting in higher high -low indicating positive follow through to Wednesdays sharp recovery as index formed a decent base in the vicinity of 200 -day ema . In the process index closed above 20day and 50 -day ema after a gap of one month indicating strength returning in the index

• Going ahead, for acceleration of upward momentum index need to sustain above 50 days EMA (placed at 46050 ) which has been acting as stiff resistance over past one month which would pave the way to head towards 47000 in the coming weeks

• We believe, index has undergone strong base formation above 200 days EMA and set the stage for next leg of up move . Thereby, we retains short term support to 44600 -44800 zone is confluence of :

• A) 61 . 8 % retracement of October – December rally (42105 -48636 ) at 44600

• B) Last weeks low at 45071

• C) rising 200-week ema (44665 )

• Structurally, index is undergoing a retracement of November – December rally wherein it gained around 15 % over 9 week period .

Index has so far retraced 50 % of the rally over past three weeks and expected to further undergo consolidation .

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