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Nifty : 22104

Technical Outlook

Day that was…

Indian equity started the week on a positive note. Nifty gained 49 points to settle the Monday’s session at 22104. However, market breadth remained in favour of declines with A/D ratio of 1:1.5 as small cap index underperformed the benchmark and lost 0.4% for the day. Sectorally, pharma, financials, metal remained at forefront while auto, oil & gas, PSU banks extended breather

Technical Outlook

* The index started the week on a negative note. However, supportive efforts from 100 days EMA helped Nifty to recover >300 points and settle the session above 22100. As a result, daily price action formed a hammer like candle, indicating buying demand emerging from elevated support base amid oversold conditions. In the process, India VIX has closed at 18 months high and settled the session at 20.5

* Going ahead, we expect Nifty to consolidate in the broader range of 21700-22400 wherein volatility would remain elevated amidst progression of election phases coupled with Q4 earning season. Key point to highlight is that, since start of CY24, intermediate corrections have got arrested within 4.5% and subsequently Nifty has recorded new high. In the current scenario, index has already corrected 4.3% from All Time High that also coincides with 100 days EMA. Thus, accumulating quality stocks on dips would be the prudent strategy to adopt as strong support is placed at 21700

* Key observations to during election phases

* A) Over past four elections, Nifty has undergone average 6% correction during polling phases. In current context index has corrected ~4% from life highs and remains in sync with empirical evidence.

* B) The India VIX has a tendency to rise ahead of Election and eventually fizzles out post election outcome as anxiety around the event settles down. During MAY 2019, rise in VIX resulted into decline in index that in turn helped Nifty to form a higher base and set the stage for next leg of up move

* On the upside 22400-22500 would now act as immediate resistance as it is confluence of:

* a) 61.8% retracement of current decline 22794-21932

* b) current week’s high is placed 22588

Nifty Bank: 47754

Technical Outlook

Day that was…

The Nifty Bank index snapped its eight day losing streak as buying demand in heavyweight private banks led to decent recovery . Nifty Private banks index (+ 1 % ) outperformed PSU banks ( - 1 % ) Nifty Bank index closed the session at 47754 , up 0 . 7 %

Technical Outlook

* The Bank Nifty started the session on a weak note and then witnessed further profit taking in early hour of trade . However index then witnessed steady recovery of about 850 points as buying emerged from key support of 47000 mark amid oversold readings . Price action formed bull candle with higher high and long lower shadow reflecting sharp recovery . Sustainability above Mondays high would pave way for extended gains towards 48500 levels which is 50 % retracement of preceding eight session decline (49974 -46983 )

* Structurally, following are key observations :

* Since late Jan’24 low of 44633 , index is following a well channeled up move forming higher bottoms in the vicinity of rising 100 -day ema (47050 ) . In Mondays session index respected this price behaviour

* Further, each of preceding three corrective declines measure 5% in magnitude

* Structurally, current decline from life highs is a healthy retracement and therefore does not alter positional bullish stance . We therefore expect that current decline would result into a higher base formation around 47000 followed by resumption of rally

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