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Nifty :23311

Technical Outlook

Day that was…

Equity benchmarks took cues from global markets where US inflation data has reignited hopes for rate cuts in 2025 which boosted the market sentiment. The Nifty gained for the third consecutive session up 98 points to settle at 23,311. The broader market outperformed the benchmark, with improved A/D ratio of 3:1. Sectorally, PSU Bank, Metal and Energy end the session in the green driven by robust gains. However, weakness witnessed in FMCG, IT and Pharma

Technical Outlook:

* The Index pared initial gains after a gap-up opening (23,213–23,377) and traded in a narrow range throughout the day. In the process, Nifty formed a small bodied candle with a close above the previous two sessions high signaling revival in momentum. Key point to highlight is that after nine sessions index managed to make a higher high low for second consecutive session and filled the Monday’s gap area

* Going ahead, we expect index to regain upward momentum and gradually head towards recent swing high of 24200 in coming months, meanwhile key support remains at 22500. Thereby, any decline from hereon should be capitalized to accumulate quality stocks in a staggered manner amid ongoing Q3FY25 earning season. Our constructive bias is based on following observations:

* a)The supportive efforts from lower band of long-term rising channel (drawn adjoining Dec22-Oct24 high projected from Mar23 low of 16828)coincided with 52 weeks EMA augurs well for next leg of up move

* b) Past four months 12% decline hauled weekly stochastic oscillator in oversold territory (placed at 20), 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) On the market breadth front, we witnessed a positive divergence where November reading of percentage of stocks above 50 DMA was 8 compared which has improved to current reading of 24 despite weekly lower low formation, indicating significant improvement.

* 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 three session highs filling the gap area created by gap down on 13th Jan, demonstrating inherent strength. 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 limited 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 bounce

Nifty Bank : 49278

Technical Outlook

Day that was :

The Bank Nifty extended the gains over third consecutive session, amid strong global cues . The index witnessed gains of 1 .08 % to settle Thursday’s session on a positive note at 49278 . Meanwhile, Nifty PSU Bank index outperformed the benchmarks, closing on a positive note at 6307 , up by 2 .55 %

Technical Outlook :

* The Bank Nifty opened gap -up, and witnessed a highly volatile session, where it formed a bull candle with small upper shadow while making higher high -low pattern, indicating a continuation in the upward momentum .

* Going ahead, the index is expected to continue the bullish bias and gradually head towards the mark of 51600 in coming month which is 61 . 8 % retracement of the recent fall (52888 -47898 ) . Meanwhile, any dip from here amid Q 3FY23 earning season should be capitalized as buying opportunity in quality stocks as strong support is placed at 46800 which is 61 . 8 % retracement of Oct -23 to Sept -24 rally (42105 - 54467 ) .

* Structurally, the index has bounced from the lower band of rising channel amid oversold conditions, indicating buying demand at lower levels . Since 2016 , on multiple occasions supportive effort emerged from the vicinity of 100 -week EMA (barring covid fall) . In current scenario after 12 % decline, the weekly stochastic oscillator has approached in oversold territory (placed at 14 ) and now tilted upward, indicating impending pullback to continue in the vicinity of 100 weeks EMA .

* Mirroring the benchmark index, the PSU Bank witnessed a follow -through buying for the third consecutive session and formed a higher high -low formation which resulted in a formation of bull candle, indicating prolongation of bullish momentum . The weekly stochastic oscillator has observed a bullish crossover, indicating extended pullback . Going ahead, we expect the index to continue to form a higher base towards 6700 mark which is 61 . 8 % retracement of Dec -24 fall from (7248 -5866 ) .

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