IGI Logo

Nifty :25935

Technical Outlook

Day that was.. The Indian equity benchmark extended its winning streak for third consecutive session to settle 25935 tracking positive global cues. Market breadth remained in favour of bulls with an A/D ratio of 1.5:1. Broader market moved in tandem with benchmark with Nifty Mid and Smallcap index gained ~0.5% each. Sectorally, Barring BFSI and Pharma all the other indices closed in green wherein Auto and Metals outshined.

Technical Outlook:

* The Index opened on a positive note and traded range-bound within a~100 points band throughout the session. The daily price action resulted in a Doji-like candle, indicating consolidation after yesterday sharp gap-up move.

* Index continues to trade comfortably above all its key moving averages and is firmly holding above the recent gap support near 25,500, reflecting strong underlying strength that makes us retreat our positive stance. Thereby, we expect the index to pave the way for a potential runaway move toward challenging its all-time high of 26,350 in the coming week.

* In the process, bouts of volatility amidst geopolitical development, inflation print and fag end of earnings season cannot be ruled out. In this backdrop, any decline should be capitalized to accumulate quality stocks with strong earnings as strong support is placed at 25200 being 61.8% retracement of recent up move (24571-26341) coincided with 200 days EMA.

Our positive bias is further validated by following observations:

* The key index heavy weights like financials, oil & gas, Auto (carrying >50% cumulative weightage of Nifty) have regained the momentum which would provide impetus for next leg of up move

* On the broader market front, Nifty midcap once again defended 52 weeks EMA over last nine months while small cap index witnessed supportive efforts from lower band of six months falling channel. The improving market breadth would result into broadening of the ongoing rally.

* Market breadth has been witnessing improvement, as the percentage of stocks trading above their 50 days SMA has bounced from bearish extremes of 15% to 52% levels, while percentage of stocks above 200-day SMA within the Nifty 500 universe enhanced to 42%. Historically, such contractions in breadth have preceded durable market bottoms, with extreme bearish readings near 15% marking inflection points in the past

Key Monitorable:

• US and India’s Inflation print

• Brent Crude is heading towards 9 months resistance trend line placed at 72. Only a decisive close above 72 would result into extended rally

Intraday Rational:

• Trend- Higher High-low pattern for three consecutive sessions

• Levels- Buy around Tuesday low and 80% retracement

Nifty Bank :60626

Technical Outlook

Day that was: Bank Nifty ended the day on a marginally negative note at 60626, down 0.1%. The Nifty Private Bank relatively outperformed gaining 0.2%

Technical Outlook:

• Index opened on a flat note and oscillated in 250 points narrow range throughout the session. The daily price action formed is Inside bar indicating breather after recent sharp up-move.

• Index extended the breather for second consecutive session and holding above gap support area (60495-60150), indicating healthy consolidation. The index continues to trade decisively above its key moving averages and has sustained above the physiological level of 60,000 mark. This structural strength reinforces our bullish bias and supports maintaining a positive outlook going forward. We expect Index to gradually resolve higher and challenge its prior swing high of 61700 levels in coming weeks.

• On a broader perspective Index has staged a strong rebound from its previous resistance, now acting as support(57628) in line with the change-of-polarity principle, indicating resumption of uptrend. Near term, volatility is likely to stay elevated ahead of the upcoming inflation data. Any corrective declines from current levels should be viewed as buying opportunities as strong demand zone is identified near 59,300, being 50-day EMA and 61.8% retracement of the current up move (57,783-61,674).

• Meanwhile, the Nifty PSU Bank Index registered a breakout above its prior intermediate highs and closed firmly above that level, reinforcing near-term bullish momentum. Going forward, the index is expected to advance toward the 9,600 zone, corresponding to the measured range breakout of the 8,702– 9,175 band

Intraday Rational:

• Trend- Rebounded from former resistance now turned as support as per change of polarity principal.

• Levels - Buy around 80% retracement of yesterday upmove(60513-60818)

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631