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Nifty : 22889

Technical Outlook

Day that was ..

The equity benchmark ended lower as fluctuating crude oil prices and geopolitical instability dented market sentiment. The Nifty faced relentless selling pressure throughout the session, ultimately settling at 22,889, down 257 points (1.11%). The midcap and small-cap indices were down 1%, each. Sectorally, PSU Banks outperformed the broader markets and closed the day in positive territory up 2.5%. The primary laggards dragging down the performance were FMCG, Realty, and IT.

Technical Outlook :

• The index started the week on a subdued note and gradually drifted downward, that formed a sizable bear candle which engulfed the previous session's candle, indicating breather following sharp recovery that helped index to breakout above the two-month falling trendline.

• Over the past six sessions, Nifty has rallied more than 950 points, pushing the daily Stochastic Oscillator into overbought territory. We believe that an extended consolidation period will allow the index to retest the breakout area of its two-month falling trend line. This breather could help index to cool off the overbought conditions and set the stage for next leg of up move toward 23500 in coming weeks.

• The 23,100–23,150 zone remains a crucial overhead resistance, with 23,170 corresponding to the 38.2% Fibonacci retracement of the preceding nine-week decline. A decisive breakout above this zone would confirm further strengthening in momentum, while failure to sustain above the breakout area could result in consolidation in 23170-22500 zone.

• Going 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.

• 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.

• 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

• US Midterm Elections

• Developments in geopolitical affairs

• Brent Crude prices and US 10-Year Treasury yields

• Brent Crude prices and US 10-Year Treasury yields

Intraday Rational :

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

Levels – Buy around Monday’s close

Nifty Bank : 55488

Technical Outlook

Day that was :

Bank Nifty ended the day down 0.6% at 55488, on back of mixed global cues. However, the Nifty PSU Bank relatively outperformed for the day gaining 2.4% for the day.

Technical Outlook :

• The index opened the week on flat note and continued its southward as intraday pullbacks were short lived. The daily price action formed is Bear candle with lower high lower low, indicating breather.

• Index failed to sustain at higher levels and faced resistance around 55900 indicating selling pressure straight from the start. Current breather is seen as a healthy retracement as Index has retraced only 38.2% of current 6 days up move (54383-56065). We expect Index to consolidate in the range 55,000-56000. Only a decisive close above 50 days EMA placed at 56100 would open door for extension of move towards 56,500 levels, coinciding with the 61.8% Fibonacci retracement of the recent decline and the 200-day EMA.

• The immediate support is placed around 54,700, corresponding to the 61.8% retracement of the recent up move 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 has witnessed breakout above last 3 weeks high (8272) indicating acceleration of upward momentum. We expect Index to head towards 8500 levels being 61.8% retracement of recent decline (8856-7862).

Intraday Rational :

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

• Levels: Buy around Mondays low.

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