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Nifty : 19690

Technical Outlook

• The daily price action resembles a bullish belt hold line candle as index endured its northbound journey post positive opening and settled in the vicinity of high, indicating rejuvenation of upward momentum.

• Going ahead, we expect index to trade with a positive bias and gradually head towards upper band of consolidation placed at 19800. Further, a decisive close above 19800 would lead to acceleration of upward momentum. In the process, stock specific action likely to continue as we enter the Q2 earning season. Thus, focus should be on accumulating quality stocks amid ongoing global volatility as strong support is placed at 19300. Our positive bias is based on following observations:

• a) Historically, during secular up move 100 days EMA acts as a strong support. In current scenario as well, buying demand emerged in the vicinity of 100 days EMA

• b) Crude oil will be the key monitorable as pullback in crude is approaching the breakdown area of 3 months rising channel. Thus, decline in crude from higher level would provide impetus for equities

• c) The US Dollar index has been sustaining below last week’s low after 12 weeks up move, indicating dwindling upward momentum amid overbought condition

• The formation of higher peak and trough signifies inherent strength that makes us confident to revise support base upward at 19300 as it is confluence of 100 days EMA is placed at 19257 coincided with last week’s panic low of 19333

• Broader markets indices have been undergoing healthy consolidation wherein over past four weeks it retraced less than 50% of preceding 4 weeks’ rally. The slower pace of retracement signifies robust price structure. Thus, dips should be capitalized to accumulate quality stock

Nifty Bank: 44360

Technical Outlook

• The price action for the day formed a bull candle that closed above Mondays falling gap area (44113 -44360 ) indicating a strong bounce back despite geo political worries

• Going forward, index holding 43300 -43500 despite geopolitical concerns could keep pull back options open from over sold zone as it is confluence of a)August - September lows and 100 -day ema . However for any meaningful pull back to materialize index needs to start forming higher high -lows and sustain above key resistance of 45000 levels

• Structurally , Index is undergoing a healthy retracement of entire April -July rally (19 % over 18weeks) in a shallow manner indicating inherent strength

• Our view is backed by following key observations

• Index has retraced 18week rally (38613 -46369 ) by just 38 . 2 % over 11 weeks indicating inherent strength

• PSU banks continue to relatively outperform and could lend some support at lower levels

• Heavy weight private banks including HDFC bank are now oversold and back to their key supports thereby projecting limited downsides

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