Sensex Trades Within Previous Day's Range - ICICI Direct
Sensex : 78581
Technical Outlook
Day that was ..
Indian equity benchmark extended its breather for second consecutive session after RBI maintained status quo on policy repo rate. The Sensex settle the day flat at 78581. Market breadth was in favor of advance with an (A/D) ratio of 1.4:1 as Nifty Mid and Smallcap index gained 0.2% and 0.8% outperforming the benchmark and registered a new all-time high. Sector-wise Metals, Auto, realty were the top performers while Private banks, FMCG, IT were the losers.
Technical Outlook :
• Sensex started the day on a positive note and oscillated within previous session range for rest of the day. As a result, the daily price action has resulted into inside bar, indicating range bound session.
• Key highlight is that, Nifty extended its consolidation for second consecutive session post a sharp 5% rally in preceding six session, indicating short-term breather. Notably, index is trading well above its confluence of key moving average, signifies positive structure remains intact. Hence, post a healthy consolidation 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 24000 being 61.8% retracement of current up move along with past 4 months rising trend line
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) Falling Crude Oil
b) 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 80% retracement of last 2 days range
Nifty Bank : 57740
Technical Outlook
Day that was :
Bank Nifty ended the day marginally negative down 0.29% at 57740 on back of mixed global cues.
Te chnical Outlook :
• Index started the day on flat note thereafter faced resistance around previous session high and remained southward throughout the day and closed on marginally negative note. As a result, the daily price action has resulted into inside bar, indicating extended breather. Index found supportive efforts from 20-day EMA around 57400.
• Going ahead we expect, index to resolve out of one month consolidation range where upper band is placed at 58500 and open the door for next leg of up move towards 60000. The key support zone of 57000 is a placement of the 50- day EMA coinciding with 50% retracement of recent rally (56024-58248) and four months rising trend line
• 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 relatively outperformed for the day forming higher high higher, 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 80% retracement of last 2 days range.
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