The Bank Nifty continued the bullish momentum from the previous session and settled the day on a positive note at 49166-ICICI Direct
Nifty :23163
Technical Outlook
Day that was… Equity benchmarks settled the Wednesday’s session on positive note, gaining 206 points, up by 0.9%, to settle the session at 23,163. Broader market remained positive with A/D ratio of 4:1 signaling broader market outperformance as Nifty midcap gained 2.31%, where as Nifty smallcap gained 3.23%. Sectorally, Realty, Financial Services, and IT outperformed, while FMCG was the only laggard.
Technical Outlook:
• The Nifty opened with an initial gap up (22,957–23026) and gradually inched upward as intraday pullbacks were bought into. As a result, daily price action formed a bull candle making a higher-high low formation indicating positive bias and a follow-through buying demand to the previous sessions doji candle, supported by a strong market breadth which was not the case in past couple of weeks. Meanwhile, India VIX continues to sustain above 18 levels, highlights elevated volatility.
• Key point to highlight is that the Nifty witnessed a bounce from the lower boundary of the support trendline (drawn connecting the August– November 2024 lows), indicating supportive efforts amid oversold conditions. Additionally, the daily stochastic oscillator has witnessed a fresh bullish crossover, indicating pick up in ongoing pullback.
• Going ahead, the continuation in the ongoing pullback for couple of trading sessions will lead the index towards recent swing high of 23300-23400 zone, sustenance above which will open the gates for the next leg of upmove towards the mark of 23700 which is 61.8% retracement mark of the recent fall (24266-22786). The follow-up buying in next couple of sessions will confirm short term bottom at the recent low of 22786. Meanwhile, on the downside, the 22,500 zone remains a key support zone.
• In the process, bouts of volatility cannot be ruled out owing to US Fed meet outcome, monthly expiry session, Union Budget coupled with Q3FY25 earnings of many heavy weight companies which would have bearing on the market.
• Historically, since 2002, Nifty has not recorded negative close for more than 3 consecutive months wherein average correction has been to the tune of 14% (barring 2008 & 2020 scenario). Buying in such scenario has been fruitful as Nifty has garnered 15% returns in subsequent three months. In current scenario, with 13% correction already in place, we expect index to maintain the same rhythm as downside remains limited with key support at 22500 levels
• On the broader market front, we witnessed a follow through buying in the Nifty Midcap and Small Cap indices, both the indices witnessed a strong bullish candle formation surpassing the previous sessions high on a closing basis. In the process the daily price action created a morning star pattern, indicating a shift towards bullish sentiment.
• On the downside, critical support is placed at 22,500 which aligns with the implied target of the recent consolidation breakdown (24,200–23,300) and coincides with the 50% retracement of the October 2023 to September 2024 rally (18,838–26,277)
Nifty Bank : 49166
Technical Outlook
Day that was : The Bank Nifty continued the bullish momentum from the previous session and settled the day on a positive note at 49166 , up by 0 .61 % . The PSU Banking index mirrored the benchmark move by gaining 0.77%. Market breadth remained in favor of bulls as ten out of twelve stocks closed on a positive note .
Technical Outlook :
• The Bank Nifty opened gap -up and witnessed gradual up -move throughout the day as intraday pullbacks were bought into, indicating bullish bias . In the process the index created a small bullish candle indicating continuation to the ongoing up -move, amid current volatility .
• Going ahead, we expect the Bank Nifty to breach the upper end of the ongoing consolidation at 49650 (47850 -49650 ) aligned with 52 -week EMA, breakout above which will further accelerate the up -move, pushing it towards 51600 mark being 61 . 8 % retracement of previous fall (53888 -47844 ) .
• Structurally, over past three weeks, the index has been hovering around the long -term rising trendline (drawn adjoining subsequent lows off jun -22 ) amid oversold conditions, indicating exhaustion on the downward momentum .
• The key point to highlight is that ,the daily price action has bounced after forming a potential double -bottom pattern and witnessed a break out of a falling trendline (joining the highs of Dec -24 and Jan -25 ) . The daily MACD witnessed a bullish crossover, indicating continuation of the ongoing pullback .
• In tandem with the benchmark index, the Nifty PSU Bank also witnessed a follow through buying after bouncing from the 50 % retracement mark of the recent up -move (5866 -6480), closing the session with a bullish bias . The daily Stochastic oscillator witnessed a bullish crossover, indicating impending pullback . Going ahead, we expect the index to move towards 6300 , which is mark of falling trendline (joining the highs of Dec -24 and Jan - 25), sustaining above which will accelerate the pullback towards 6720 being 61 . 8 % retracement mark of the previous fall (7248 - 5866 ) .
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