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Nifty : 22055

Day that was…

Equity benchmarks snapped six sessions winning streak and settled Wednesday’s session at 22055, down 142 points or 0.6%. The market breadth turned in favour of decline with A/D ratio of 1:1.9 as midcap and small cap indices skidded over 1%, each. Sectorally, barring PSU Banks, realty, metal all other indices ended in red weighed down by IT ahead of US Fed minutes

Technical Outlook

• The index started the session on a positive note and recorded fresh All Time High of 22249. However, profit booking from higher levels dragged index below past two session’s low. Consequently, daily price action formed a bear candle that engulfed past two session’s trading range, indicating breather after past six session’s 700 points up move

• Going ahead, we reiterate our positive bias and expect Nifty to gradually head towards revised target of 22700 in coming month as seasonal correction in election year approached maturity (historically, in election year index tends to bottom out in Feb/March followed by pre-election rally). In the process, extended breather in the Midcap and small cap space would make market healthy. Thereby, extended breather in the broader market should not be construed as negative instead adopt buy on dips strategy in quality stocks which has been faring well. In the process, strong support is placed at 21600. Our positive bias is further validated by following observations:

• A)The faster pace of retracement signifies robust price structure as Nifty retraced past seven sessions decline in just four sessions

• B) Heavyweight Banking index (commanding >33% weight) has formed a strong base at 200-day ema

• C) The most of global equity markets are hovering around their 52-week highs, indicating buoyant global cues

• D) steady oil prices and bond yields are likely to act as tailwind

• The strong rebound from key support highlights elevated buying demand that makes us revise support base at 21600 as it is confluence of: A. 80% retracement of current up move off mid Feb low of 21530 is placed at 21667 B. Last week’s low is placed at 21530 C. 50 days EMA is placed around 21500

Nifty Bank: 47020

Day that was :

The Nifty Bank snapped six session winning streak on weekly expiry session . Some marginal profit taking at higher levels led index to close at 47020 , down 75 points or 0 .15 %

Technical Outlook :

• The index started the session on a flat note and then oscillated between gain and losses (47000 -47300 ) for rest of the session as profit taking after six day rally limited upsides as daily stochastic entered overbought readings (90 ) . Price action for the day formed a bear candle indicating profit taking as index almost approached short term target of 47500 . However maintained higher high -low formation indicating continuation of positive bias and relatively outperformed Nifty over past two sessions

• Over past few sessions index has surpassed key hurdle around 46000 mark and now approaching another milestone around 47500 levels . A short term breather would provide an entry opportunity as private banking stocks are now witnessing upward momentum alongwith already strong trends in PSU banks . Adopting buy the dips strategy recommended for target of 47500 in coming week which is a value of 80 % retracement of 16 -25th jan decline and bearish gap area

• Since index has surpassed key hurdle and witnessing good breadth we are vising short term support to 45800 levels as it is confluence of :

• A) 50 % retracement of past six session rally (44633 - 47136 ) at 45800

• B) rising 100 -day ema (45731 )

• 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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