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Nifty : 24796

Technical Outlook

Day that was…

Equity benchmark extended losses over sixth session in a row tracking intensified geopolitical issue. Nifty plunged 218 points or 0.9% to settle Monday’s session at 24796. Sectorally, barring IT, all major indices ended in red weighed down by financials, metal, Oil & Gas

Technical Outlook:

* The index started the week on a negative note and gradually inched southward as intraday pullbacks were short lived. The daily price action resulted into bear candle carrying lower high-low, indicating continuation of corrective bias on the breach of 50 days EMA. In the process, Index VIX (that gauge the market sentiment) gained 6%

* The past six sessions 6% correction hauled daily stochastic oscillator in oversold territory (placed at 5) while on hourly chart RSI is showing positive divergence, indicating impending pullback. However, for a meaningful pullback to materialize, index need to decisively close above previous sessions high (25143). Failure to do so would lead to extended correction wherein strong support is placed at 24400. In the process, volatility to remain high while discounting development on ongoing geopolitical concerns coupled with RBI Policy and start of Q2FY25 earning season which would further dictate the trend.

* Structurally, key point to highlight is that, in CY24, on 5 occasions intermediate corrections have been limited to the tune of 5-6% range while respecting 50 days EMA and time wise such corrections have been arrested within 6-7 sessions and subsequently witnessed a decent up move. In current scenario, with 6% correction behind us, index is hovering around 50 days EMA amid oversold conditions. Thereby, a decisive close above previous session’s high would be the first sign of pause in downward momentum that would open the door for pullback towards 25500 in coming week

* Crude oil would be the key monitorable amid escalation of geopolitical worries. The current up move appears to be more of technical pullback from oversold territory. We expect, it to face stiff resistance in the 80- 82 zone

* We believe, the strong support for the Nifty is placed around 24400 as it is confluence of:

* a) 100 days EMA which has been majorly held since Nov-23 is placed at 24384

• b) The 80% retracement of Aug-Sept rally (23894-26277) is placed at 24370

Nifty Bank : 50479

Technical Outlook

Day that was :

Nifty Bank index continued with its losing streak over sixth consecutive session tracking global volatility owing to geopolitical tension in the middle east . Index settled the session at 50479 , down 1 . 9 % while PSU bank relatively underperformed as it was down by 3 . 3 %

Technical Outlook :

* The Index continued with its downward bias throughout the day . The daily price action resulted into sizable bear candle carrying lower high low indicating corrective bias .

* With past six sessions 8 % decline Bank Nifty has approached key support of rising trend line drawn adjoining subsequent lows of Oct -23 to Feb -24 amid oversold conditions (as daily Stochastic is placed at 7 ) . Thus, going ahead follow through strength above previous sessions high (on a closing basis) would confirm pause in downward momentum that would open the door for pullback towards 52400

* PSU bank index is hovering around key support and expected to attract supportive efforts near their long term mean . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for banks .

* Structurally since July -23 , on 4 occasions Bank Nifty has not corrected for more than 9 % . In current scenario with 8 % correction already in place we believe supportive efforts should emerge amid oversold condition

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