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Nifty : 24328

Technical Outlook

Day that was…

Indian equity benchmarks started the week on a positive note driven by firm global cues, strengthening of Rupee vs Dollar and Reliance Industries better than expected results and positive FII’s flows. Nifty settled the day at 24,328, up by 1.20%. Broader market relatively outperformed as Midcap gained 1.62%. Sectorally, barring IT all the sectors closed in green, where Oil & Gas, PSU Bank and Healthcare were outperformers.

Technical Outlook

* The Nifty opened the week with a gap-up (24039-24070) and maintained the northward journey throughout the day, as a result it recovered Friday’s losses. Consequently, the daily price action formed sizeable green candle, indicating robust price structure. Key point to highlight is that Nifty, after two sessions of breather, resumed its upward journey led by buying in index heavyweights Reliance Industries and financials, where the contribution from the top five stocks was ~180 points and nine consecutive days of strong positive FII’s flows turned the month’s net figure from negative to positive, resulting in a total net buy of Rs. 298.84 crores for April month..

* Going ahead, in the truncated week, we expect volatility to remain elevated, tracking geopolitical worries wherein Nifty is likely to consolidate in the broader range of 24500-23300 zone. After 12% rally seen over past three weeks index has formed a durable bottom. Strong support is placed at 23300. Over past three decades there have been three major instances of escalations due to armed conflicts in India (i.e., Kargil War, 26/11, Pulwama attack). On each occasion it formed major bottom, once anxiety around the event settled down and garner decent return in subsequent three months. Even in current scenario, possibility of knee-jerk reaction on escalation of geopolitical worries cannot be ruled out. However, historical evidences suggest that market will eventually stabilise. Hence, we advise not to panic but rather capitalize it to accumulate quality stocks and build quality portfolios from medium to long term perspective amid ongoing earning season.

* The blend of following parameters makes us believe that the index has formed a durable bottom. Tracking the historical data, benchmark index has staged a strong rebound after approaching the price and time wise correction. Key point to highlight is that the current up move is backed by the faster pace of retracement, indicating structural turnaround that has been further validated by significant improvement in momentum, breadth as well as sentiment indicators. Key monitorable which would act as tailwind:

* a) Bilateral Trade Agreement between India and US

* b) Continuation of FII's inflow

* c) Further weakness in US Dollar index post breakdown from two years consolidation

* d) Decline in Brent crude oil prices

* 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 mid cap index after retesting its 200-day EMA on Friday staged a strong recovery in today’s session, regaining upward momentum.

* We expect volatility to prevail amid ongoing global and domestic uncertainty, However, after today’s strong price action, we revise our support at 23300 which is 50% retracement of the move from (21743-24365) and 50-day EMA.

Nifty Bank: 55433

Day that was :

The Bank Nifty continued the buying demand from the previous week where it settled the Monday’s trading session on a positive note at 55433 , up by 1 .41 % . Meanwhile, the Nifty PSU Bank index outperformed the benchmark where it settled at 6695 , up by 2 .44 %

Technical Outlook

* The Bank Nifty opened the week on a flat note, however it soon witnessed buying demand from lower levels and traded with a bullish bias throughout the day, indicating supportive efforts at lower level . The price action resulted in a sizeable bull candle, indicating structural strength .

* Key point to highlight is that, the Bank Nifty witnessed buying demand from lower level after 3 days of breather, indicating that the broader structure is intact . However, it needs to close above the psychological mark of 56000 to resume its upward momentum, failure to do so will result in prolongation of consolidation in a broader range of 56000 -54300 where the mark of 54300 will act as an immediate support, being 61 . 8 % retracement of recent up -move (53085 -56098 ) . In the ongoing truncated week, we expect volatility to remain elevated tracking geopolitical worries . Meanwhile, stock specific action in likely to continue on the basis of ongoing result season . The traders are advised to accumulate quality stocks in staggered manner from a medium -term perspective .

* 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 witnessed supportive efforts after retesting the previous breakout mark of 6500 and resumed its upward momentum, where the price action resulted in a sizeable bull candle, indicating structural strength . Going ahead, we expect the index to form higher base and gradually head towards the mark of 7200 being the Dec -24 swing high . Meanwhile, the immediate support on the downside is placed at 6350 mark, being 61 . 8 % retracement mark of the recent up -move (5904 -6838 ) .

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