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Nifty : 25940

Technical Outlook

Day that was..

The equity benchmark clocked a fresh All Time High of 26011 and settled the volatile session tad above Monday’s close at 25940. The market breadth turned flat as wherein small caps relatively underperformed by falling 0.6%. Sectorally, IT, metal, Auto outshone while FMCG, financials took a breather

Technical Outlook:

* The index elevated volatility at life highs and settled the session on a flat note. The daily price action formed a high wave candle carrying higher high-low, indicating continuation of positive momentum. Meanwhile, Nifty midcap endured with its record setting spree

* Going ahead, we maintain our positive bias and expect Nifty to gradually head towards 26200 in the coming session. Key point to highlight is that, past 2 weeks >1200 points up move hauled daily stochastic oscillator in overbought territory (placed at 93), indicating possibility of temporary breather at higher levels can not be ruled out. Hence, any temporary breather from hereon should be capitalized as incremental buying opportunity as strong support is placed at 25500. Our positive bias is validated by following observations:

* a) Last few sessions, large caps have relatively outperformed Smallcap 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

* The buying demand at elevated base makes us revise support base at psychological mark of 25500 as it is 38.2% retracement of past 2 weeks up move (24753-26011)

Nifty Bank : 53968

Technical Outlook

Day that was:

Nifty Bank index snapped its eight session winning streak and closed lower amid profit taking after recent rally in large banks . Index lost 137 points or 0 .25 % to close at 53968

Technical Outlook:

* The Index opened on a flat note and then traded choppy in a range of 53950 and 54150 for rest of the session, resulting in a small bear candle indicating breather after a strong rally. Although price is making higher high, daily momentum indicators appear overbought and may lead into slow down in momentum in coming sessions . Same will however be confirmed upon decisive breach of Mondays low at 53750

* 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

* PSU banks oversold and expected to attract buying demand near their long term mean . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for PSU banks .

* Price structure : Current up leg in Bank Nifty is of higher magnitude (50369 -54197 ) as compared to previous up leg (49654 -51750 ) indicating improving price structure and corroborates bullish view

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