The Bank Nifty extended its breather for the third session amid profit booking - ICICI Direct
Nifty :25141
Technical Outlook
Day that was…
• Indian equity benchmarks closed on a positive note amid positive global cues. The Nifty settled at 25141 up 37 points. Market breadth was in favor of advances, with an A/D ratio of 1.20:1. Sectorally, PSU Bank, FMCG and PVT Bank were the laggards, whereas, Oil & Gas, IT, Pharma outperformed.
Technical Outlook:
• Nifty traded within 150 points range from past three sessions. The index crosses 25,200, on intraday basis, for the first time since October 15, 2024 but failed to hold on the gains to settle on a flat note. This led to the formation of Doji candle, signaling extended breather.
• Past three days breather after last weeks sharp upmove is making market healthy and the index sustained above the contracting triangle breakout with a runaway gap for the third consecutive day despite profit booking on higher levels, indicating inherent strength. The resumption of uptrend after shallow correction confirms that the bull market template is still intact. We reiterate our stance that Nifty would open the door for next leg of up move towards 25500 in coming weeks. Volatility along the way if any should be used as a buying opportunity with sector rotation in play as we do not expect Nifty to breach key support of 24700 in coming week.
• Key thing to highlight is that, the index has staged a strong 16% rally from April lows. Post that, Nifty it consolidated for two weeks wherein it corrected 3% and resumed its uptrend. The elongation of rallies followed by shallow retracement is a key ingredient of a structural bull market and in current week we expect the same rhythm to follow. Any decline from hereon should be used as buying opportunity.
• On the broader market front, outperformance was clearly reflected in the ratio chart of Nifty 500 / Nifty 100 that continued to inch northward. The current rally is backed by improvement in the market breadth as currently 62% stocks of Nifty Midcap 100 and nifty Smallcap100 universe are trading above their long term 200 days SMA compared to a month back reading of 20% & 30%, respectively, that augurs well for durability of ongoing up move.
• Key monitorable which would provide cushion to the ongoing up move:
• a. US and India Inflation data
• b. FII's inflow
• c. Further weakness in US Dollar index and Brent crude oil prices • d. Bilateral Trade Agreement between India and US
• The index closed above 25000 mark for third consecutive session which makes us maintain our support base at 24700 as it is 20- day EMA and 38.20% retracement of the rally from (23935-25222)
Nifty Bank : 56459
Technical Outlook
Day that was :
• The Bank Nifty extended its breather for the third session amid profit booking . The index settled at 56 ,45 9 , down 0 .30 % . The Nifty Pvt Bank index mirroring the benchmark, closed the day on a negative note at 28 ,000 , down 0 .26 % .
Technical Outlook :
• The Bank Nifty extended its breather for the third session amid profit booking making lower -high -low where it traded within 383 points range and made a small red candle, signaling prolongation of consolidation .
• Bank Nifty is trading in rising channel where the index in Wednesday’s session filled the gap on closing basis where the immediate support is placed at lower band of the channel and 20 -day EMA (55700 ) . The implied target of the consolidation range comes at 58800 which coincides with upper band of the rising channel . Meanwhile, on account of breach of 55700 strong support is placed at 55000 , which marks the 80 % retracement of the recent up -move (54 ,442 –57 ,049 ) . 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 profit booking for the second session 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, indicating strong upside momentum . While the Bank Nifty is trading at all -time high, the PSU Bank index is still trading ~14 % 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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