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Nifty :23696

Technical Outlook

Day that was…

Indian equity benchmark concluded the Wednesday’s session on a negative note, and settled the day at 23696, down by 0.18% for the day. However, the market breadth remained positive with improved A/D ratio of 2.30:1 as broader market relatively outperformed specifically small cap index which gained ~2%. Sectorally, Metals, Oil & Gas, and PSU Bank outperformed while Realty, FMCG and Consumer Durables were the laggards.

Technical Outlook:

* The Nifty witnessed gap up opening post which it traded in a narrow range as it witnessed mild profit booking for the day after the sharp up move of the last two sessions. As a result, the daily price action formed a small red body candle, indicating breather after recent sharp up move

* Going ahead, we expect index to trade with a positive bias while sustaining above the past three weeks breakout area of 23300 and gradually head towards 24000 in coming weeks which is in the proximity of 38.2% retracement of the previous fall (26277-22786). Key point to highlight is that, the Bank Nifty has logged a resolute breakout from three weeks base formation, indicating resumption of uptrend. We believe, the extended pullback in Bank Nifty would drive Nifty higher (as it carries ~32% weightage in Nifty). In the process, elevated volatility to prevail as we sail through the Q3FY25 earnings season coupled with upcoming RBI Policy. On the global macro front, the dollar index close below 108 levels, Brent oil and US Bond yield are ~2% down which is inversely co-related signifies a positive bias.

* Historically we have observed that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, the index has approached price and time wise correction. Structurally, since 2002, bull market average corrections have been to the tune of 14% while time wise index has not recorded negative monthly close for more than 3-4 months. Over past four months index has corrected 13% while absorbing the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting impending pullback.

* Meanwhile, the formation of higher high after six weeks corrective phase and close above budget sessions high, indicating shift in momentum that makes us revise support base at 23200 as it is confluence of 61.80% retracement of recent up move (22786-23762) coincided with current week’s low of 23222.

* On the broader market front, we witnessed a follow up buying in the Nifty Midcap and Small Cap indices which outperformed the benchmark and staged a strong buying, which is a healthy sign. Meanwhile, On the market breadth front, the percentage of stocks above 50 days SMA (within Nifty 500 Universe) has improved from bearish extreme level of 10 last week to 23, meanwhile weekly stochastic oscillator gave a positive cross over reviving from extreme over sold zone below 20, signaling renewed trend.

Nifty Bank : 50343

Technical Outlook

Day that was :

The Bank Nifty witnessed a rangebound action where it closed the session on a positive note at 50343 , up by 0 .37 % . The Nifty PSU Banking index outperformed the benchmark move and closed at 6329 , up by 1 .03 %

Technical Outlook :

* The Bank Nifty witnessed gap -up opening continuing the bullish momentum from the previous session . However, the index lacked intraday follow through buying and traded within a range of 307 points throughout the day . In the process, it created a small bearish candle post minor correction from top in the closing hours . Nonetheless, the index closed with a positive bias and today’s rangebound action was mere breather to the 1600 points up -move witnessed in last couple of trading session, indicating a healthy sign for further up -move .

* On expected line, the Bank Nifty witnessed a breakout from the three -week base formation around the lower band of 2 years rising channel and closed above the budget day high, indicating revival in the upward momentum . Thus, making us believe, that the index will continue to resolve higher and move towards the mark of 51600 being 61 . 8 % retracement of previous fall (53888 - 47844 ) . In the process, the mark of 48700 shall provide immediate support and any dip witnessed hereon should be capitalized as a buying opportunity in quality stock in a staggered manner .

* Structurally, after 12 % correction the Bank Nifty bounced from the lower end of the long -term rising trendline amid oversold condition, indicating a pause in the downward momentum . The change in market breadth observed in the current week suggests that a short -term bottom is in place and the mark of 48700 will act as an immediate support, being 61 . 8 % retracement mark of the recent up -move (47844 -50009 ) .

* Mirroring the benchmark index, the PSU Bank index witnessed gap -up opening and closed on a positive note . The price action created a higher low, thus indicating continuation of the bullish momentum . The index witnessed a trendline breakout joining the highs of Dec -24 , along with a bullish crossover on daily stochastic oscillator, indicating acceleration to the ongoing up - move . Going ahead, the next level of resistance is placed at 6720 being 61 . 8 % retracement mark of the previous fall (7248 -5866 ) .

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