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Nifty :23213

Technical Outlook

Day that was…

Equity benchmarks took cues from global markets, with the cool off in Dollar Index and a strengthening INR cushioning the domestic market. The Nifty gained 37 points to settle at 23,213. The broader market outperformed the benchmark, with the A/D ratio of 1.25:1. Sectorally, Realty, IT, and Energy led the gains, whereas Health Care, Pharma, and Auto were the laggards

Technical Outlook:

* The Index witnessed a gap-up opening (23,176–23,250) and gradually moved upward to 23,293 levels, where it encountered resistance near the November low (23263). As per the rule of polarity, previous support acted as resistance. In the process, Nifty traded within ~150-point range in a choppy manner during Wednesday’s session. In the process, it formed a Doji like candle over second consecutive session, signaling a pause in the ongoing downtrend. Key point to highlight is that after eight sessions of decline index made a higher high low in Wednesday’s session.

* Going ahead, we expect index to regain upward momentum and gradually head towards recent swing high of 24200 meanwhile key support remains at 22500. Thereby, any decline from hereon should be capitalized to accumulate quality stocks. Our constructive bias is based on following observations:

* a)The supportive efforts from lower band of long-term rising channel coincided with 52 weeks EMA augurs well for next leg of up move

* b) Past four months 12% decline hauled daily and weekly stochastic oscillator in oversold territory (placed at 16 and 17, respectively), indicating impending pullback

* c) Improving global sentiment on the back of lower-than-expected US inflation data boosted market sentiment consequently US Dollar index and 10-year yield cooled off.

* d) Geopolitical anxiety around Gaza war would settle down post ceasefire announcement between Israel and Hamas

* e) The market breadth indicator (Net of advance-Decline) has approached its bearish extremes, indicating sentiment improvement going ahead

* f)Several heavyweight companies are coming out with the Q3FY25 earnings in coming sessions. Better than expected earnings would boost the market 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).

* The broader market outperformed the benchmark index, with the Nifty Midcap and Small Cap indices closing above their previous session highs, demonstrating inherent strength. Both indices also generated a bullish crossover in stochastic oscillators, suggesting a pause in the downward trend. we believe the index is undergoing secondary correction in a bull market which we have observed on 3 occasions since Covid lows, where price wise average correction has been to the tune of 17% while time wise such correction not lasted for 4-5 months. In current scenario with 15% already in place. Thereby, we expect index to maintain the same rhythm and stage a bounc

Nifty Bank : 48752

Technical Outlook

Day that was :

The Bank Nifty extended the gains over second session amid elevated volatility . The index inched up 0 .08 % to settle Wednesday’s session on a positive note at 48752 . Meanwhile, Nifty PSU Bank index aligned with the benchmarks move, closing on a positive note at 6151 , up by 0 .10 % .

Technical Outlook :

* The Bank Nifty opened gap -up, and witnessed intraday volatility, where the daily price action resulted into high wave candle, post the sizeable bull candle indicating pause in downward momentum .

* Going ahead, amid global improvement and the index forming a higher high -low pattern, signaling a continuation of upward momentum towards the 51600 which is 61 . 8 % retracement of the recent fall (52888 -47898 ) EMA . Failure to do so will result in extended correction where the next support is placed at 46800 which is 61 . 8 % retracement of Oct -23 to Sept -24 rally (42105 -54467 ) .

* Structurally, the index has held and witnessed a bounce from the lower band of the long -term rising channel . Since 2016 on multiple occasions supportive effort emerged from the vicinity of 100 -week EMA (barring covid fall) . We expect the Bank Nifty to maintain the same rhythm and stage a bounce in coming session . In current scenario, the index is approaching the same amid oversold conditions as in past four weeks 10 % decline has hauled weekly stochastic oscillator in oversold territory (placed at 10), indicating impending pullback .

* Mirroring the benchmark index, the PSU Bank witnessed a follow -through buying resulting in a formation of high wave candle . Going ahead, we expect the index to continue taking support at the long -term trendline joining the lows of Oct -20 and June -22 and hold the recent low of 5866 and gradually form a higher base towards 6400 mark which is 50 % retracement of Dec -24 fall from (7248 -5866 ) .

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