The Bank Nifty closed on a positive note, closing at 57210 .45 , up 0 .80 % - ICICI Direct
Nifty :25220
Technical Outlook
Day that was…
* Equity benchmarks rallied on Wednesday, tracking positive global cues after the US and Japan announced a trade agreement. Nifty settle the day at 25220 up 0.63%. Sectorally, Realty and FMCG underperformed, while, Auto, Health Care and Nifty Financial Services outperformed.
Technical Outlook:
* The index opened the day with a positive gap and made higher-highlow throughout the session where pullbacks were bought into. This led to the formation of a small bull candle with small lower wick, signaling supportive efforts at lower levels.
* Nifty is expected to witness gap up opening tracking buoyant global cues as S&P 500 clocked yet another fresh all-time highs which boosted market sentiments. Key point to highlight is that, index closed above its 20-day EMA after eight sessions, showing strength, and after consolidating near the lower band of its rising channel it closed above previous sessions high indicating buying demand at lower levels. Going ahead, a decisive close above previous week’s high (25255) would open the gate towards 25800 in coming month. In addition to that, Nifty has witnessed positive hidden divergence where price made a higher low and RSI made lower low indicating bounce from current levels. Meanwhile, stock specific action would continue amidst Q1 earning. Immediate support is in the vicinity of 24800- 24500 zone.
* Structurally, since April intermediate corrections have been limited to 3% while sustaining above its 50 days EMA. In addition to that, over past 17-days index has retraced 61.80% of preceding 11-days 5% up move. Slower pace of retracement indicating robust price structure that bodes well for next leg of up move. Hence, focus should be on accumulating quality stocks on dip backed by strong earnings.
Key Monitorable which will dictate the further course of action:
a) All eyes will be on outcome of US-India bilateral trade deal.
b) Falling US Dollar index would result into FII's inflow.
c) India VIX has extended losses and now approaching April low of 10.2, indicating participants anxiety at lowest level and soon we can see spike in VIX which would result into directional move going ahead.
* Structurally, the formation of higher peak and trough while absorbing host of negative news around geo-political issues coupled with absence of US–India trade tariff decision. Further, strong market breadth depict strength as currently 64% stocks of Nifty 500 universe are trading above 200-days SMA compared to last weeks reading of 60% while last month reading was 52%. This signals that the market is building strength for the next leg higher.
* We maintain our support base at 24800-24500 zone for the Nifty which is based on 50% retracement of recent rally (23936-25669)
Nifty Bank : 57210
Technical Outlook
Day that was
* The Bank Nifty closed on a positive note, closing at 57210 .45 , up 0 .80 % . The Nifty Pvt Bank index mirrored this sentiment and ended on a positive note at 28 ,037 , up 0 .69 % .
Technical Outlook
* The Bank Nifty after the initial down move rebounded from its previous session low and traded within 250 -points range during first half of the session and staged strong bounce in second half which resulted in a bullish candle, signaling inherent strength.
* Key point to highlight is that Bank nifty recent price action witnessed a supportive buying demand in the vicinity of 20 -day EMA, and formation of higher -high -low structure, further validating the uptrend remains structurally intact and index will gradually resolve higher. Looking at the current structural development of the index heavy -weight stocks we believe index would gradually challenge its All Time High placed around 57600 levels and eventually accelerate up move towards 58800 levels in coming quarter which is the implied target of the consolidation from (56098 -53483).
* Since April, intermediate corrections have remained shallow while the index has consistently held above its 50 -day EMA. Moreover, over the past three weeks, the index has retraced 50% of the preceding 4.50% up move seen in the prior three weeks. The slower pace of retracement highlights a robust price structure, which augurs well for the next leg of the uptrend. Consequently, any dip from current levels could offer fresh buying opportunities as immediate support is placed near 56000 zone which is 38.2% retracement level of its preceding rally.
* PSU Bank, moving in tandem with the benchmark, also witnessed buying demand and closed higher within the previous session’s range, indicating a pause from current downward movement, PSU bank breaks four day losing streak of declines and closed on a positive note, however index has maintained a supportive effort and bounces from the vicinity of rising trendline support which is also backed by a 50 day -EMA key reference, indicating buying demand at lower levels. After breaking out from an eleven -month falling trendline on 19th May, the index has maintained a higher -high -low structure as per Dow -theory on the weekly chart, signaling uptrend is intact. While Bank Nifty trades below ~2.5% from its all -time highs, the PSU Bank index remains about ~12% below its all -time high, presenting a compelling case for a catch - up move. Immediate support on the downside is placed at 6,700, which is the recent swing low and coincides with the 20 -week EMA.
* Structurally, Bank Nifty is undergoing phase -wise expansion, with each rally establishing new price zones of acceptance. Instead of sharp directional moves, the index is progressing through brief consolidations that serve as launchpads for subsequent advances. This transition from volatility -driven swings to range - bound bases suggests increasing market maturity, with demand emerging at higher levels. The narrowing amplitude of corrections indicates that stronger hands are absorbing supply, maintaining trend continuity
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