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Nifty : 25057

Technical Outlook

Day that was…

The index erased Monday’s gains and settled the session on a subdued note. Nifty lost 70 points to settle at 25057. Broader market relatively outperformed wherein Small cap gained >1%. Sectorally, financials, FMCG, realty remained upbeat while auto, metal took a breather

Technical Outlook:

• The index consolidated in a narrow range after initial decline. Daily price resulted into bearish candle carrying higher high-low, indicating extended consolidation amid stock specific action.

• Going ahead, we expect prolongation of ongoing consolidation in 25500-24700 range. Key point to highlight is that, in the ongoing consolidation phase market has seen improvement in market breadth wherein % of stock above 50 days EMA have bounced to 48 after bottoming out at bearish extreme of 30, indicating pick up in broader market participation. Thus, we believe, ongoing higher base formation above 50 days EMA would set the stage for extended pullback towards upper band of consolidation placed at 25500 in coming weeks. In the process, strong support is placed at 24700 which we expect to hold.

• We believe, index heavy weights would be in focus as stocks carrying >35% weightage in Nifty are coming out with Q2FY25 earnings which would dictate further trend of the market along with geopolitical development

• Structurally, on expected lines, supportive efforts emerged in Nifty from 50 days EMA after 6% correction. In CY24, on five occasions, after 5-6% correction index has a tendency to form a base in the vicinity of 50 days EMA for next couple of weeks and set the stage for next leg of up move. In the current context, we expect Nifty to maintain this rhythm and hold the key support of 24700 on a closing basis that is based on following observations:

• a)61.8% retracement of Aug-Sept rally (23894-26277), placed at 24800

• b)Last month’s low is placed at 24753

• Crude oil price retreated after facing stiff resistance in 80-82 zone as fears of supply disruptions from the conflict between Israel and Iran appears to be easing out. We expect, crude to consolidate in 75-82 range

Nifty Bank : 51906

Technical Outlook

Day that was :

Nifty Bank index continued with its upward momentum and settled the session on a positive note as 51906 , up 0 . 2 % . In the process, PSU Bank index continued with its relative underperformance by losing 0 . 2 %

Technical Outlook :

• The index witnessed a range bound activity as it recouped initial losses and settled the volatile session on a flat to positive note . As a result, daily price action formed a small bear candle, carrying higher high -low, indicating continuation of positive momentum .

• Going ahead, we expect Bank Nifty to relatively outperformed the benchmark and gradually head towards 52400 . Structurally, the BankNifty has once again respected the long -term rising trend line held since Oct -23 that coincided with 100 days EMA, highlighting robust price structure . Further, sustainability above weekly hammer like candle that formed above 100 days EMA would confirm conclusion of corrective bias that would open the door for next leg of up move .

• Key point to highlight is that, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 2 - 3 weeks before unfolding next leg of up move . In current scenario, with 8 % correction already in place, we expect Bank Nifty to form a base and eventually outperform the Nifty as ratio chart of Banknifty/Nifty has found support from cycle lows and now inching upward

• PSU bank index is undergoing base formation in the vicinity of 200 days EMA amid oversold condition . Apart from technical oversold conditions, potential of lower interest rates are expected to act as tailwind for banks

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