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Nifty : 24852

Technical Outlook

Week that was..

The index stated the week on a firm note and recorded new all time high of 25333 on Monday, however global volatility triggered profit taking after 14 session rally leading Nifty to close 1.5% down. Nifty Midcap index lost 1.3% while Small cap index closed flat

Technical Outlook:

* The Nifty snapped three-week winning streak and formed a Engulfing Bearish Candlestick pattern on weekly time frame indicating profit taking amid overbought prices and pause in upward momentum

* Going forward, we expect last week highs of 25300 to act as strong hurdle in coming week and Nifty to undergo retracement of past three-week rally as prices reached overbought conditions. Meanwhile stock specific action may continue with key support for index at 24500 levels where supportive efforts are expected to emerge, which is value of rising 50-day ema and 61.8% retracement of recent three-week rally. Our view is anchored upon following key observations:

* a) Historically, September has been a month with elevated volatility both domestically and globally. With Nifty already witnessing three-week rally, we expect markets to witness bouts of volatility and undergo short term corrective phase. From structural point of view, this will only make long term trend healthy

* b) Brent prices were down 7% during last week as fear of slowdown and higher US production weighed on sentiment. Prices are at the cusp of break down from past eight-month triangular consolidation

* c) Over past 10 sessions, on 70% occasions breadth was in favour of declines indicating profit taking after a good run up. This may continue for next few sessions

* d) Sectorally, Pharma, FMCG, IT are expected to relatively perform better. PSU banks appear oversold technically and are poised for a bounce back

Nifty Bank : 50576

Technical Outlook

Week that was :

Nifty Bank declined 1 . 5 % for the week amid selling pressure on Friday led by weak global cues . Private and PSU banks both declined during the week while relatively NBFC fared better . Index closed at 50576 , down 1 .51 % for the week

Technical Outlook :

* The Fridays session began on a weak note and then index continued to slide further down as the session progressed . In the process, index also breached prior week’s lows and formed a sizeable Bearish engulfing line candle on weekly time frame indicating selling pressure and extended corrective phase after three week gains

* Index has exhibited loss of upward momentum and sizeable selling pressure on Friday indicating corrective bias with strong resistance being placed at Friday’s high off 51400

* Meanwhile, short term support is now being revised lower to 50000 levels being a psychological mark and 80 % retracement of preceding three week gains

* Price structure : A) We observe that index is forming sequential lower highs indicating continuation of corrective phase since early July which is seen as retracement of post election rally B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current context 7 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a strong bottom formation around 200 -day ema around 48500 levels

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