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Sensex : 78428

Technical Outlook

Day that was ..

Indian equity benchmark concluded the weekly expiry session lower ahead RBI policy and development around US-Iran talks. The Sensex settle the day at 78428, down 0.3%, while broader market Nifty Mid and Smallcap index has clocked a fresh all-time high before settling on a flat note. Baring Metals, all major indices closed in red while Realty and Oil&Gas were the top laggards.

Technical Outlook :

• Sensex started the day with a ~150 points gap-up, however its has witnessed profit booking emerging from higher levels. As a result, the daily price action has formed a bearish candle with lower shadow, highlights temporary breather post a sharp rally in the previous sessions.

• Index is likely to witness gap-up opening on the back of positive geopolitical developments that led to fall in brent crude prices. Key highlight is that, Nifty has retreated from its formerly trendline breakout point, signaling previous resistance is now turning as support as per change of polarity principal. Additionally, it’s seen mean reversion towards its 200-day EMA, signifies higher base formation. Hence, post a healthy profit booking we expect index to eventually resume its upward momentum and head towards 25500 in coming months led by Banking, Auto, Metal, Pharma, Defence. Thereby, any decline from current level should be utilize as buying opportunity with strong Q1 earning as strong support is placed around 23800 being 80% retracement of current up move

Our constructive stance is based on following observations :

I. Nifty reclaimed its 200 days EMA (24370) after 5 months.

II. After 7 months, Nifty closed above its previous months high. III. After an ~11% April surge, Nifty built a strong base above its three-month trendline by absorbing a 1,500-point consolidation amidst geopolitical headwinds.

IV. Midcaps are regaining momentum near all-time highs as Q1 earnings optimism shifts away from large caps.

V. Lower Brent crude (-13%) and a weakening US Dollar Index are providing strong tailwinds for emerging markets.

VI. August is historically favorable, delivering positive returns 60% of the time with a 3% average gain.

VII. Sharp drops in July FII selling (~Rs 6,000 crore vs. the Rs 57,000 crore average) and global AI trade volatility are driving capital back into high-growth Indian markets.

Key Monitorable :

a) RBI Monetary Policy

b) Falling Crude Oil

c) Sustenance of US Dollar index below $100 would provide cushion to Indian equities

Intraday Rational :

• Trend – Formation of higher high-low structure in daily time frame, indicating positive bias.

• Levels – Buy around Tuesdays close

Nifty Bank : 57907

Technical Outlook

Day that was :

Bank Nifty snapped 3 days winning streak and closed session on negative note down 0.5% at 57907 on back of mixed global cues.

Technical Outlook :

• Index started the day on negative note and continued to remain southward forming lower high lower low throughout the sessions and filled Mondays gap-area indicating breather. As a result, the daily price action has resulted into bear candle with lower high lower low structure, indicating profit booking.

• Index is likely to witness gap-up opening tracking the positive geopolitical developments which resulted into fall in brent crude prices. Index found supportive efforts from 20-day EMA around 57400. Going ahead we expect, index to resolve out of one month consolidation 58500-56500 in coming month and open the door for next leg of up move towards 60000. The key support zone of 56700 is a placement of the 50-day EMA coinciding with 50% retracement of recent rally (56024-58248).

• Another observation is that over last 5 weeks Index has retraced by 38.2% of earlier 3 weeks rally, indicating slower pace of retracement which would help to set stage for next leg of rally.

• The PSU Bank Index also seen breather forming Inside bar above 20-day ema after 8 session, indicating support at short term moving average. Going ahead follow through strength above last week week(8423) high would set the stage towards 8700 levels

Intraday Rational :

• Trend - Supportive efforts emerged from the lower band of the contracting triangle

• Levels – Buy around Tuesdays close.

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