The Bank Nifty opened near previous resistance levels placed at 57300 - ICICI Direct
Nifty : 25062
Technical Outlook
Day that was…
* Equity benchmarks took extended breather and settled the weekly expiry day at 25062 down 0.63%. Market breadth was in favor of declines, with an A/D ratio of 1:2 where broader markets underperformed the benchmark. Small cap closed on a negative note down 1.09%. Sectorally, IT, FMCG and Realty underperformed, while, PSU Bank, Health Care and Metal outperformed.
Technical Outlook:
* The index kicked off the day with a positive gap; it encountered resistance near the previous week’s high, and resulted into extended sell-off. This price action created a bear candle, signaling extended breather.
* Key point to highlight is that, the index, over the past eight sessions, has been trading in a range of 375 points, consolidating near the lower band of its rising channel, indicating range-bound activity. Going ahead, a decisive close above previous week’s high (25255) would open the gate towards 25800 in coming month. In addition to that, Nifty has witnessed positive hidden divergence where price made a higher low and RSI made lower low indicating bounce from current levels. Meanwhile, stock specific action would continue amidst Q1 earning. Immediate support is in the vicinity of 24800- 24500 zone.
* Structurally, since April intermediate corrections have been limited to 3% while sustaining above its 50 days EMA. In addition to that, over past 18-days index has retraced 61.80% of preceding 11-days 5% up move. Slower pace of retracement indicating robust price structure that bodes well for next leg of up move. Hence, focus should be on accumulating quality stocks on dip backed by strong earnings.
Key Monitorable which will dictate the further course of action:
* All eyes will be on outcome of US-India bilateral trade deal.
* Falling US Dollar index would result into FII's inflow.
* India VIX has extended losses and now approaching April low of 10.2, indicating participants anxiety at lowest level and soon we can see spike in VIX which would result into directional move going ahead.
* Structurally, the formation of higher peak and trough while absorbing host of negative news around geo-political issues coupled with absence of US–India trade tariff decision. Further, strong market breadth depict strength as currently 65% stocks of Nifty 500 universe are trading above 200-days SMA compared to last weeks reading of 60% while last month reading was 52%. This signals that the market is building strength for the next leg higher.
* We maintain our support base at 24800-24500 zone for the Nifty which is based on 50% retracement of recent rally (23936-25669) and 20-week EMA
Nifty Bank : 57066
Technical Outlook
Day that was..
* The Bank Nifty closed on a negative note, closing at 57066 , down 0 .25 % . The Nifty Pvt Bank index have underperformed benchmark index ended on a negative note at 27874 , down 0 .58 % .
Technical Outlook
* The Bank Nifty opened near previous resistance levels placed at 57300 and witnessed profit booking throughout the session forming a bearish candle, signalling a breather or a consolidation phase after a significant upward move .
* Key point to highlight is that Bank nifty is currently in a consolidation phase while sustaining above 20 days EMA . Looking at the current structural development of the index heavy -weight stocks we believe index would gradually challenge it's All Time High placed around 57600 levels and eventually accelerate up move towards 58800 levels in coming quarter which is the implied target of the consolidation from (56098 -53483 ) .
* Since April, intermediate corrections have remained shallow while the index has consistently held above its 50 -day EMA . Moreover, over the past three weeks, the index has retraced 50 % of the preceding 4 .50 % up move seen in the prior three weeks . The slower pace of retracement highlights a robust price structure, which augurs well for the next leg of the uptrend . Consequently, any dip from current levels could offer fresh buying opportunities as immediate support is placed near 56000 zone which is 38 . 2 % retracement level of its preceding rally .
* Outperforming benchmark, PSU Bank index closed above the previous day's high, signalling bullish momentum, PSU bank witnessed profit booking during first half of the session and staged strong bounce in second half and closed on a positive note, however index has maintained its supportive effort and bounces from the vicinity of rising trendline support which is also backed by a 50 day -EMA key reference, indicating buying demand at lower levels . After breaking out from an eleven -month falling trendline on 19th May, the index has maintained a higher -high -low structure as per Dow -theory on the weekly chart, signalling uptrend is intact . While Bank Nifty trades below ~ 2 . 5 % from its all - time highs, the PSU Bank index remains about ~12 % below its all -time high, presenting a compelling case for a catch -up move . Immediate support on the downside is placed at 6 ,700 , which is the recent swing low and coincides with the 20 -week EMA .
* Structurally, Bank Nifty is undergoing phase -wise expansion, with each rally establishing new price zones of acceptance . Instead of sharp directional moves, the index is progressing through brief consolidations that serve as launchpads for subsequent advances . This transition from volatility -driven swings to range - bound bases suggests increasing market maturity, with demand emerging at higher levels . The narrowing amplitude of corrections indicates that stronger hands are absorbing supply, maintaining trend continuity
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