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Nifty :24467

Technical Outlook

Day that was…

Equity benchmark concluded volatile session on a flat note amid volatile global cues. Nifty settled Wednesday’s session at 24467, up 10 points. Market breadth remained sturdy with A/D ratio of 1.5:1 as broader market endured its relative outperformance. Sectorally, financials, consumer durables, IT remained at forefront while FMCG, auto, oil & gas took a breather

Technical Outlook:

* Index witnessed a volatile session wherein Nifty oscillated by ~600 points range throughout the day and concluded the session on a flat note. The daily price action resulted into doji like candle carrying higher high-low, indicating continuation of positive bias amid elevated volatility.

* Going ahead, we reiterate our positive bias and expect Nifty to gradually head towards 25000 by the end of December. The higher base formation above 20 days EMA depicts buying demand at elevated support base. Hence, any temporary breather from hereon should be utilized to accumulate quality stocks on dips as immediate support is placed at 23900. Our constructive view is based on following observations:

* a) Follow through strength post 2 months consolidation (52500-49800) breakout signifies robust price structure. Rejuvenated uptrend in banking space would provide impetus to subsequent up move in Nifty

* b) Past three decades historical data exhibit that December seasonality favour bulls with 73% success rate wherein average returns have been to the tune of 3%

Nifty Bank : 53267

Technical Outlook

Day that was :

Defying the benchmark volatility, Nifty Bank index settled Wednesday’s session on a positive note at 53267 , up 1 . 1 % . Within the segment, PSU Banks remained outlier gaining 2 .25 % for the day . Nifty PSU Bank index relatively outperformed the benchmark by gaining 2 . 6 %

Technical Outlook

* The index began the session on a positive note and gradually inched northward as the day progressed. The daily price action resulted into strong bull candle carrying higher high - low, indicating acceleration of upward momentum

* The follow through strength post 2 months consolidation breakout confirm resumption of uptrend that bodes well for extension of ongoing uptrend towards 53500 in coming weeks as it is 80 % retracement of past 2 months decline (54467 -49787 ) . The northbound journey of ratio chart of Bank Nifty/ Nifty suggest continuation of relative outperformance going forward . Meanwhile, key support is placed at 51700 as it is 50 % retracement of current up move (49787 -53387 )

* Structurally, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 3 - 4 weeks before unfolding next leg of up move . In current scenario, with ~ 8 % correction already in place, we expect Bank Nifty to maintain the same rhythm and stage bounce in coming sessions

* On expected lines, PSU Bank index recorded breakout from 3 months base formation . Key point to highlight is that, the PSU Bank index witnessed faster pace of retracement as twelve weeks consolidation retraced back in just 3 weeks, indicating structural turnaround that bodes well for next leg of up move towards 7700

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