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Nifty : 21150

Technical Outlook

• The index clocked a fresh All Time High of 21593. However, failed to sustain at higher levels as profit booking dragged index near days low. As a result, index pared >400 points from days high. The daily price action resulted into bearish engulfing candle that engulfed past three days candle, indicating pause in upward momentum amid overbought conditions.

• Going ahead, we expect index to consolidate in the broader range of 21600-20800 which will help index to cool off the overbought conditions and pave the way to gradually head towards our earmarked target of 22000 in the coming weeks. In the process, bouts of volatility would prevail. Hence, accumulating quality stock on dips would be the prudent strategy to adopt as strong support is placed at 20800

• The broader positive structure is further validated by following observations: A) Breather after faster pace of retracement in Bank Nifty while revived buying demand in Nifty IT index signifies inherent strength. Cumulatively both indices carries ~50% weightage in Nifty which would provide impetus for next leg of up move B) Strong domestic macros, expectations of rate cuts globally would continue to act as tailwinds

• The formation of higher peak and trough along with shallow retracement signifies elevated buying demand that makes us confident to retain support base at 20800 as its is confluence of 38.2% retracement of past three weeks rally (19768-21593) coincided with last week’s low of 20770 and 20 days EMA placed at 20763

Nifty Bank: 47445

Technical Outlook :

• The price action for the day formed large bear candle indicating profit taking in heavyweights after sharp run up 4400 points over past three weeks led prices in to overbought trajectory . As mentioned in earlier edition, Daily and weekly stochastics above 93 was alarming and led to profit taking . Structurally such profit taking after sharp rall y would make markets healthy and should not be construed negative . On immediate basis current week’s high of 48200 would act as a hurdle for next few sessions . We would expect index to consolidate in 46800 -48200 over next few sessions

• Meanwhile, we revise short term support to last week’s low of 46800 levels which we expect to hold ahead of next weeks monthly expiry

• Structurally, index posted faster retracement of entire July -October decline in just four weeks highlighting robust price structure . Further participation of both private/public sector banks make the rally more dependable in terms of having further legs . We expect PSU banks to relatively outperform over medium term as the PSU bank index has given a multi year breakout

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