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We have hit a record high given the overall thrust and icing on the cake was BankNifty which witnessed a back-to-back bullish session and closing at record high levels. This is classic confirmation of Dow theory as we see Nifty 50, CNX 500, large cap, and concentrated index such as BankNifty as well closing at ATH. The weakness which is evident is in small cap and Midcap Space. Let’s dive deeper and draw the coming week’s roadmap.

The Breadth and Market Internals

Nifty managed to close at ATH, the momentum thrust we shared last week as evidence, but at the same time we have witnessed bullish thrust on 19^th of September. Secondly, this was further corresponded by FII pumping in more than 14k Crores of money in a single day. Both of this do indicate that upward bias is strong at the same time we have witnessed that it is the time for large caps that have seen momentum. Lastly, BankNifty closing at record highs indicate that we are seeing fresh money moving to Finance, Banking and related stocks. Below is the chart of Nifty Thrust, and BankNifty Thrust and the Breadth which is a bit divergent but remains healthy. Lastly FII positions in cash and Fno.

the Price Action

Price action has expanded a lot with recent gains across Nifty and BankNifty and we do know that price goes from sideways to expansion move and revert to its mean(sideways again).

In the very short term for coming week we do believe the bias should remain on the positive side but any dip towards 25500 – 25400 should be utilized. This level is point of polarity as previous week index has consolidated briefly within this range. On the higher side, Immediate resistance is at 25920 while beyond that 26000 and 26200 is point where most of the confluence is. As per the upward trending channel in midterm, 26500 is the projection for Nifty 50.

BankNifty on the other hand looks poised for further upside but we expect some decent consolidation that can bring in smart money.  RSI, which measures momentum based on Average gain and loss, is at 90.50 indicates to extreme positive readings and ADX at 34.91 points to initial stage of upward trend. The upside as per channel in the mid term points to 55000 – 55200 while on short term for coming week support at 53400 – 53200 can be utilized. On higher side, Fib points to resistance at 54500 – 54600 in short term. The mid term to positional view points much more head room for BankNifty but dips should be utilized as risk reward becomes better. Below is the chart of BankNifty Spot on 4 hourly timeframe.

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