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Nifty : 24854

Technical Outlook

Day that was…

The benchmark extended losses over third consecutive week despite positive global cues. Nifty settled the week at 24854, down 0.4%. However, small cap index outperformed by gaining 0.3% for the week. Sectorally, financials outshone while auto, consumption underwent profit booking

Technical Outlook:

• Friday’s up move helped index to recover some of intraday-week losses and settled the week on a flat to negative note. As a result, weekly price action formed a small bear candle with shadows on either side, indicating extended consolidation amid stock specific action. Key point to highlight is that, Nifty managed to hold the key support of 24700 amid oversold conditions, indicating impending pullback on expected line

• Going forward, we expect Nifty to hold the key support threshold of 24700 and challenge the upper band of consolidation placed at 25200, that would eventually open the door for next leg of up move towards 25500 in coming weeks

• Structurally, current 7% correction has made the market more healthy as most of the Nifty50 constituents have approached their key long term averages which offers favourable risk reward set up. In a bull market, 7-10% correction is a common phenomenon. Buying in such scenario have been fruitful from medium term perspective. Hence, accumulating quality large caps would be the prudent strategy to adopt amid ongoing earning season. Our positive bias is further validated by following observations:

• A.The ratio chart of Bank Nifty / Nifty has resolved higher after forming base at long term cycle lows. As a result, Bank Nifty managed to hold last week’s low amid elevated volatility and eventually gained ~2% during the week, highlighting inherent strength. We believe, the revival in Banking stocks would provide impetus for pullback rally in Nifty as Bank Nifty carries 32% weightage in Nifty

• B.The breakout from 2 and half year’s consolidation in Russell 2000 index signifies broader participation that bodes well continuation of ongoing bull run on ahead of US election and further rate cut expectation

• C.Crude oil price have dropped 5% after facing stiff resistance in 80- 82 zone. In upcoming weeks, we expect it to consolidate in 72-80 range

Nifty Bank : 52094

Technical Outlook

Day that was :

Defying the benchmark move, Bank Nifty regained upward momentum and settled the week at 52094 , up 1 . 8 % . In the process, PSU Bank index gained 0 . 9 % for the week

Technical Outlook :

• The fag end buying demand from 100 days EMA coincided with long term rising trend line helped index to recover intra - week losses and settle the week on a positive note . As a result, weekly price action formed a strong bull candle, indicating follow through strength to last week’s hammer like candle .

• Going ahead, we expect Bank Nifty to endure its upward momentum and gradually head towards 52800 in coming weeks . Key point to highlight is that the ratio chart of Bank Nifty / Nifty has resolved higher after forming base at long term cycle lows . As a result, Bank Nifty managed to hold last week’s low amid elevated volatility and eventually gained ~2% during the week, highlighting inherent strength. We believe, the revival in Banking stocks would provide impetus for pullback rally in Nifty as Bank Nifty carries 32 % weightage in Nifty

• Structurally, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 2 - 3 weeks before unfolding next leg of up move . In current scenario, with 8 % correction already in place, we expect Bank Nifty to form a base and eventually outperform the Nifty

• PSU bank index is undergoing base formation in the vicinity of 200 days EMA amid oversold condition . Meanwhile, potential of lower interest rates are expected to act as tailwind for banks

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