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Nifty :23487

Technical Outlook

Day that was… Indian equity benchmarks closed the session on a negative note amid muted global cues and settled at 23487, down 0.77%. The market breadth was in favor of declines, with an A/D ratio of 1:4. The Nifty Midcap and Small cap indices underperformed the benchmark move with losses of 0.62% and 1.07%, respectively. Sectorally, barring Auto all sectors closed in red with Oil & Gas, Realty and Healthcare being laggards.

Technical Outlook:

• The Nifty opened the trading session on a flat note and made a lower highlow structure throughout the day, where intraday pullbacks were short-lived. As a result, the daily price action formed a bear candle, indicating breather after recent sharp up move.

• Key point to highlight is that, the index took breather after the sharp ~1,500- point rally (over past seven sessions), amid overbought zone the Nifty reached around 23800 in Tuesday’s session where it faced resistance, which coincides with 61.8% retracement of previous fall (24858-21964). Hence chances of pullback for couple of sessions cannot be ruled out and should be considered as healthy retracement making a higher base, which will eventually pave way for further upside towards 24200. On the downside, the psychological mark of 23,000 would act as strong support and the focus should be on accumulating quality stocks with a medium-term perspective.

• Structurally, the Nifty witnessed a faster pace of up-move where it regained previous 19 days of fall in just 14 trading session, indicating structural turnaround backed by improvement in breadth as well as sentiment indicator. Any pullback from here should be capitalized as buying opportunity, wherein volatility will prevail, amid upcoming result season and tariff related clarity from Trump. Given this historical precedent, we believe the index is approaching price-wise maturity with limited downside and is poised for the next leg of the uptrend. Our constructive bias is validated by following observations:

• a. The ratio chart of Nifty/Dow Jones has recorded a breakout from a sixmonth falling channel, indicating the domestic market could relatively outperform US equities going forward.

• b. The cool off in US 10-year Yields, Dollar Index and Brent crude augurs well for emerging markets by easing inflation and boosting sentiment.

• On the broader market front, similar to the benchmark the Midcap and Small cap indices are undergoing healthy retracement, after breaking out from a three-month falling trendline, an encouraging sign of inherent strength. Both the indices have seen a rebound after approaching maturity of price and time wise correction. Hence, the focus should be on accumulating quality stocks (backed by strong earnings) in a staggered manner.

• Formation of higher peak and trough indicates buying demand at elevated base, which makes us revise the support levels at 23,000, which represents a 50% retracement of the current upmove (21,965–23,869). This level is expected to act as a strong cushion, ensuring that dips remain buying opportunities rather than trend reversals

Nifty Bank : 51209

Technical Outlook

Day that was : The Bank Nifty continued the bearish bias from the Tuesday’s session and settled the day on a negative note at 51209 , down by 0 .77 % . The Nifty PSU Banking index underperformed the benchmark, closing the day at 6143 , down by 1 .19 % .

Technical Outlook :

• The Bank Nifty opened on a flat not and attempted to advance north during initial hours . However, selling pressure from higher levels caused the index to breach the previous days low and close the session with a bearish bias . The price action resulted in sizeable bear candle, indicating pause in upward momentum .

• Key point to highlight is that, the index encountered resistance around the previous swing high and psychological mark of 52000 in Tuesday's trading session and witnessed breather in last two trading sessions . The index decisively closed below the previous days low after nine consecutive days of sharp up - move, indicating a pause in upward momentum . However, the faster pace of retracement observed from the multi -support zone of 47800 which assisted the index to regain its past five weeks decline in just a single week, indicates structural turn around . Hence, any pullback from here should be viewed as a healthy retracement rather than a negative reversal . Moving ahead, we expect the index to form higher base and eventually head towards the mark of 52500 being 80 % retracement mark of the previous fall (53888 -47703 ) . On the other hand, the near - term support is placed at 50200 which is 38 . 2 % Fibonacci retracement mark of the recent up -move (47703 -51801 ) .

• Structurally, the Bank Nifty bounced from the vicinity of 100 - week EMA after forming a triple bottom pattern . Additionally, the faster pace of retracement resulted in the momentum indicators to rebound from bearish extremes . The weekly stochastic oscillator has observed a bullish crossover suggesting structural strength .

• Mirroring the benchmark index, the Nifty PVT Bank index extended the breather from the previous trading session and settled the day with a bearish bias . The index decisively closed below the previous sessions low, indicating a pause in upward momentum . However, any pullback from here should be viewed as a healthy retracement and should be capitalized as buying opportunity for the upside towards 26500 being 80 % retracement of previous fall (27280 -23508 ) .

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