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Nifty :24718

Technical Outlook

Week that was…

• Indian equity benchmarks closed the week on a negative note amid weak global cues and geopolitical concerns in the Middle East. The Nifty settled at 24718 down -1.14% for the week. Market breadth was in favor of declines, with an A/D ratio of 1:2 where broader markets underperformed. Sectorally, barring IT and Pharma all sectors closed in red for the week, where Realty, PSU Bank and FMCG were the laggards.

Technical Outlook:

* Nifty started the week on a positive note where it consolidated three days within a range of 150 points after the breach of 25000 the down move accelerated making lower-high-low to close the week on a negative note. This led to the formation of sizeable bear candle, signaling extended breather.

* Brent crude oil jumped 18% during the week ($78) tracking escalated geopolitical tensions in the oil-rich Middle East. The risk-off sentiment fueled the momentum in safe heaven gold, up ~4% at $3433. Going ahead, we expect volatility to remain elevated tracking geopolitical worries. Hence, development of geopolitical concern coupled with US Fed policy would have major bearing on the market which would dictate further course of action. Further, it is important to note that despite elevated volatility Nifty managed to hold key support threshold of 24500 and staged a rebound. Thereby, in the coming week, holding 24500 on a closing basis would highlight strength and open the door for further pullback wherein immediate resistance is placed at 25200.

* In the last four decades there have been six major geopolitical escalations. On each occasion it formed major bottom once anxiety around the event settled down. Investing in such panic reactions with long term mind set has been rewarding as index has witnessed double digit returns in subsequent three months. In the current scenario, post the kneejerk reaction, we believe market would stabilise. Hence, we advise dips should be capitalised to build quality portfolios from medium to long term perspective.

* Structurally, the elongation of rallies followed by shallow correction is a perfect recipe of bull market. In current scenario, over past 21 sessions index has retraced merely 23.6% of preceding 25 sessions 16% up move. Slower pace of retracement indicating robust price structure that bodes well for next leg of up move

* On the broader market front, Nifty midcap is undergoing healthy retracement after 28% rally which should be used as buying opportunity based on following observations:

* a) Since April low, Midcap index has not corrected >6% while on the weekly chart it has not closed below its previous week’s low. In current scenario, despite ongoing volatility, midcap index has been maintaining the same rhythm.

* b) Further, the ratio chart of Nifty 500/Nifty 100 has been inching upward that clearly indicates relative outperformance

* c) Improving market breadth as currently 55% of stock are trading above 200 days SMA compared to last month reading of 30%

* Key monitorable which would provide cushion to the ongoing up move:

* a) Development of geopolitical concern

* b) US Fed Policy

* c) Brent crude is poised at immediate hurdle of $78. Lack of follow through strength would result into consolidation in 78-66 levels

* d) Despite current decline, Index VIX is trading below immediate hurdle of 16

* e) Further weakness in US Dollar index

* f) Bilateral Trade Agreement between India and US

* The key support threshold of 24500 for the Nifty is based on lower band of past four weeks consolidation coincided with 50% retracement of recent rally (23935-25222) and Friday’s panic low is placed at 24473.

Nifty Bank : 55527

Technical Outlook

Week that was :

* The Bank Nifty closed the week on a negative note amid weak global cues and geopolitical concerns in the Middle East . The index settled the week at 55 ,527 , down 1 .96 % . The Nifty Pvt Bank index relatively outperforming the benchmark, closed the week on a negative note at 27528 , down 1 .09 % .

Technical Outlook :

* The Bank Nifty extended its breather for the straight fifth session making lower -high -low and closed the week near previous weeks low and made a bearish engulfing candle, signaling prolongation of consolidation .

* Bank Nifty broke down from the rising channel in Friday’s session and closed below 20 -day EMA after 24 session despite this development the Friday’s gap -down move got arrested in the vicinity of 50 % retracement of the move from (53483 -57049 ) . To resume the uptrend the index, need to decisively close above previous sessions high . Immediate hurdle for Bank Nifty is at 57049 if closed and sustained above it then the gates are open for the implied target of the consolidation range 58800 which coincides with upper band of the rising channel . Meanwhile, on account of breach of 55149 which is panic low of Friday strong support is placed at 54500 , which 50 -day EMA coincides with consolidation zone . Any, decline from current levels would offer incremental buying opportunities .

* Structurally, the Bank Nifty is witnessing an elongation of rallies followed by shallow retracements, signifying a robust price structure . The April months up -move of 14 % is stronger compared to the March month’s 9 % rise . Additionally, the declines are becoming shallower, with the April months decline being 4 . 6 % versus 5 . 4 % in March 2025 after recent 7 % upmove we expect same rhythm to continue where the current decline should be seen as buying opportunity .

* Underperforming the benchmark the PSU Bank index witnessed bearish engulfing candle on weekly and closed on a negative note . The index broke out from an eleven -month falling trendline on 19th May and, since then, has been forming a higher -high -low structure which is intact, indicating strong upside momentum . While the Bank Nifty is trading near all -time high, the PSU Bank index is still trading ~16 % below its all -time high, presenting a compelling case for a catch -up move . Meanwhile, immediate support on the downside is placed at 6 ,700 , which is the 38 .20 % retracement of the rally from 7th April 2025 to 9th June 2025 .

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