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Nifty :24346

Technical Outlook

Week that was…

Indian equity benchmarks witnessed a subdued week marked by stock-specific action, ending the truncated trading week with modest gains and settled the week on at 24,346, up 1.3%. Consequently, the ratio chart of Nifty/Nifty Midcap witnessed falling trendline breakout suggesting the benchmark to continue its outperformance. Sectorally, Realty, Auto and IT outperformed whereas, Metal and FMCG were the laggards for the week.

Technical Outlook:

* In line with our expectation, the Nifty index witnessed stiff resistance around 24500 on multiple occasion last week, indicating profit booking at higher levels. The weekly price action resulted in a small bull candle with long upper shadow, indicating prolonged consolidation after recent sharp up move. However, formation of higher high-low signifies that broader uptrend remains intact. Additionally, the ratio chart of Nifty/Nifty Midcap witnessed falling trendline breakout suggesting the benchmark to continue its outperformance.

* Nifty expected to open gap-up amid renewed buying demand in the US market as S&P 500 witnessed longest winning streak in two decades. Consequently, it recovered losses since announcement of reciprocal tariff on 2nd April. In addition to that, cool off in Brent crude oil prices and weakness in US Dollar index would provide further cushion to domestic market. Taking cognizance of aforementioned global macros, makes us believe, Nifty would eventually resolve out of upper band of consolidation placed at 24500 and pave the way towards psychological mark of 25000 in coming weeks. In the process, volatility to remain elevated tracking geopolitical worries wherein stock specific action would continue amid earning season. On the oscillator front, the weekly stochastic oscillator is in overbought territory (placed at 92), indicating temporary breather. For the coming week, strong support is placed at 23800-23500 zone.

* In current scenario, possibility of knee-jerk reaction on escalation of geopolitical worries cannot be ruled out. However, historical evidences suggest that market will eventually stabilise. Hence, we advise not to panic but rather build quality portfolios from medium to long term perspective amid ongoing earning season. There has been an ancient market saying of “Sell in May and go away”. However, the historical data suggests that the Nifty has witnessed positive returns in 9 out of 12 years (2013-2024) with an average return of 2.1%. This makes us believe that any dip amid volatility related to domestic and global factors should be capitalized as buying opportunity.

* The blend of following parameters makes us believe that the index has formed a durable bottom. Tracking the historical data, benchmark index has staged a strong rebound after approaching the price and time wise correction. Key point to highlight is that the current up move is backed by the faster pace of retracement, indicating structural turnaround that has been further validated by significant improvement in momentum, breadth as well as sentiment indicators. Key monitorable which would act as tailwind:

* a) Bilateral Trade Agreement between India and US

* b) Continuation of FII's inflow

* c) Further strengthening of Rupee post 1.5% of correction in last week augurs well for equity market.

* d) Decline in Brent crude oil prices

* We expect the market to trade with a positive bias amid ongoing volatility where the current breather would help index to form higher base and close above 24500 will further fuel the rally towards the psychological mark of 25000. For the coming week, strong support is placed at 23800-23500 zone. Meanwhile, on the upside, 24500 would continue to act as immediate resistance

Nifty Bank : 55115

Technical Outlook

Week that was :

The Bank Nifty witnessed range bound action for the second consecutive week settling on a flat note at 55155 , up by 0 .83 % . Meanwhile, the Nifty PSU Bank index underperformed the benchmark where it settled at 6554 , up by 0 .29 %

Technical Outlook :

* The Bank Nifty opened the week on a strong note, however it soon witnessed selling pressure on higher levels and closed the week on a flat note . The price action resulted in an Inside bar, indicating prolonged consolidation .

* Key point to highlight is that, the Bank Nifty is witnessing elongation of rallies as the recent up -move is larger (14 % ) as compared to that observed in previous month ( 9 % ) . Additionally, the declines are getting shallower as the recent decline is of 3 . 4 % as compared to 5 . 6 % observed in Mar -25 , indicating robust price structure . Going ahead, this robust price structure makes us believe the recent consolidation will cool off the overbought conditions, post which the index will challenge its all -time high of 56100 and eventually head higher towards uncharted territory in coming month, continuing the structural strength .

* Structurally, the Bank Nifty is showing resilience as compared to the benchmark as it witnessed faster pace of retracement where it regained previous 6 months of decline in less than 2 months, indicating structural turnaround . Additionally, the index broke out of an eight -month falling trendline and surpassed its lifetime high, indicating robust structure .

* In tandem with the benchmark index, the Nifty PSU Bank index witnessed selling pressure on higher levels and closed the week on a flat note, indicating prolonged consolidation . The index is consolidating in a broader range of 6500 -6850 from past two weeks . Going ahead, we expect the index to form higher base and gradually head towards the mark of 7200 being the Dec -24 swing high . Meanwhile, the immediate support on the downside is placed at 6350 mark, being 61 . 8 % retracement mark of the recent up -move (5904 - 6845 ) .

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