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Nifty :24198

Technical Outlook

Day that was…

Equity benchmark extended downward momentum over third session in a row ahead of US Fed meet outcome. Nifty settled Wednesday’s session at 24199, down 137 points. The market breadth remained in favour of declines with A/D ratio of 1:2 as broader market relatively underperformed. Sectorally, barring Pharma, IT all major indices ended in red weighed down by financials, metal

Technical Outlook:

* The index began the session on subdued note and gradually inched southwards as intraday pullbacks were sold into. As a result, daily price action formed a bear candle carrying lower high-low, indicating extended correction. The lack of follow through strength signifies prolonged consolidation in the broader range of 24850-24000.

* In today’s session, Contrary to our expectation Nifty is likely to witness gap down opening below key support of 24200 tracking US Fed meet outcome. Going ahead, follow through strength above previous sessions high would require to pause the ongoing downward momentum else continuation of ongoing downward momentum wherein immediate support is placed at 23600. On the upside, 24800 would continue to act as immediate resistance

* Structurally, over past nine sessions it has merely retraced 38% of preceding ten sessions rally, highlighting robust price structure. Hence, we expect index to form a higher base above 23600 zone that would pave the way to resolve higher towards 25200. Our overall positive stance is validated by following observations:

* a) Heavy weight sectors to drive next leg of up move: Nifty IT index is forming higher base in the vicinity of All Time High while Bank Nifty has been witnessing slower pace of retracement, highlighting robust price structure. Cumulatively both sector carries 50% weightage in Nifty

* b) Broader market in focus: Ratio chart of Nifty 500 / Nifty 100 recorded breakout from 6 months consolidation, suggesting broader market to outperform going ahead.

* c) Structure: Elongation of rallies followed by slower pace of retracement amid improving market breadth indicates robust price structure. Buying on dips would be the prudent strategy to adopt

* The formation of higher peak and trough signifies uptrend is intact that makes us retain support base at 23600 levels as it is confluence of:

* a) 80% retracement of current rally (23263-24857) at 23580

Nifty Bank : 52140

Technical Outlook

Day that was :

Bank Nifty inched downward over third session in a row amid heightened volatility ahead of US Fed meet outcome . The index lost 1 . 3 % to settle the session at 52139 . Meanwhile, Nifty PSU Banking index relatively underperformed the benchmark by losing 1 .92 % .

Technical Outlook :

* The Bank Nifty opened with a gap down and gradually moved lower as intraday pullbacks failed to sustain . The daily price action resulted into, bear candle carrying lower high - low, indicating extended correction

* Contrary to expectation, the index is likely to witness gap down opening below key support of 52000tracking US Fed meet outcome . Going ahead, a decisive close above precious sessions high would be the prerequisite to pause the ongoing downward momentum . Else extended correction wherein next key support is placed at 50500 mark . Meanwhile, on the upside 53800 would continue to act as immediate resistance

* Key point to highlight is that, the index is witnessing slower pace of retracement as over past 9 sessions index has retraced less than 50 % of preceding 10 sessions up move (49787 -53888 ) from the November low of 49787 to the recent high of 53888 . We believe that the ongoing retracement will make market healthy and form a higher base, paving the way for a fresh up -move once it concludes .

* Mirroring the benchmark index, the PSU Bank index extended its retracement and ended the session on a subdued note . In the process it breached the mentioned support of 6825 on a closing basis . Moving ahead, for any upside pullback to gain traction, the index must break above the previous sessions high . Clearing this hurdle is crucial for the upside momentum to resume and for index to reclaim the bullish trajectory

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