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Nifty : 25791

Technical Outlook

Day that was..

The equity benchmark concluded eventful week on a positive note as US Fed rate cut boosted market sentiment. Consequently, index clocked a fresh All Time High of 25849. Nifty settled the week at 25790 up 3.8%. However, broader market relatively underperformed as smallcap lost 0.8%. Sectorally, rate sensitives like financials, realty, auto remained at forefront while recently rallied IT and Pharma relatively underperformed

Technical Outlook:

* The index started the week on a muted note. However, Friday’s sharp up move helped index to resolve higher and clocked a fresh all time high of 25849. Consequently, Nifty surpassed our target of 25800. The formation of sizable weekly candle with carrying higher high-low formation signifies continuation of uptrend

* The formation of higher peak and trough supported by revived traction in BankNifty signifies inherent strength that makes us revise target to 26200 for the upcoming month. However, readers should note that over past 2 weeks Nifty has rallied ~1100 points which hauled short term oscillator in overbought conditions. Thus, any temporary breather from hereon should be capitalized as incremental buying opportunity as strong support is placed at 25300. Our positive bias is validated by following observations:

* a) Last few sessions, large caps have relatively outperformed Midcap category which is reflected in weak breadth. Fed’s 50 bps cut has put spotlight on dollar index which is expected to weaken. Technically, its already in sequential downtrend. However, decisive breach of 100 mark would lead to sharp and quick decline towards 98 and would be positive in terms of global liquidity especially for EM including India. Consequently, large caps may remain in focus going forward

* b) On expected lines, ratio chart of BankNifty / Nifty staged a strong rebound from cycle low. As a result, Bank Nifty scaled back to life highs led by large private banks. With banks having significant weightage on Nifty, strength in corporate banks and large NBFCs would act as tailwind for current uptrend. PSU Banks have also achieved price wise maturity of uptrend and provide favourable risk-reward. We expect, Bank Nifty to gradually head towards 54800 while strong support is placed at 52800

* Sectorally, BFSI, Capital Goods, IT, Infra, Real Estate, Consumption are expected to outperform while PSU banks are currently poised at key support

* The buying demand at elevated base makes us revise support base at psychological mark of 25300 as it is placement of 20 days EMA coincided with last week’s low

Nifty Bank : 53793

Technical Outlook

Day that was :

Nifty Bank index surged to new highs amid strong buying across heavyweight private banks and closed near days high at 53793 , up 755 points or 1 .42 %

Technical Outlook :

* The Index commenced Fridays session on a positive note and then continued to gain in first half of the session before some volatility set -in mid -way through session . Index closed near days high and in the process surpassed its all time highs decisively indicating extended rally and breakout from 10 weeks of consolidation range . Price action formed a strong bull candle with higher high -low indicating continuation of upward momentum . Although daily momentum indicators appear overbought, only a decisive breach of previous session low would indicate pause in upward momentum

* Going forward, some volatility near life highs may not be ruled out . However, dips are expected to attract buying and eventually lead index towards 54800 as it is 138 . 2 % retracement of the recent correction (53357 -49727 ) . Meanwhile, given the strong momentum, we have revised short term support levels to 52800

* Private Banks leading PSU peers : Most private banks have witnessed strong traction and expected to continue their outperformance while PSU banks are currently poised at good support and offer favourable risk -reward

* Price structure : Current up leg in Bank Nifty is of higher magnitude (50369 -53353 ) as compared to previous up leg (49654 -51750 ) indicating improving price structure

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