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Nifty : 24836

Technical Outlook

Day that was…

Equity benchmarks edged higher tracking firm global cues. The Nifty settled the session tad above Friday’s close, at 24836. Market breadth turned positive with A/D ratio of 1.45:1 as broader market relatively outperformed as Nifty midcap an small cap gained 1%, each. Sectorally, Oil & Gas, PSU Banks, Realty outshone while IT, FMCG took a breather

Technical Outlook:

* The index started the week on a positive note and clocked a fresh All time High. However, profit booking from psychological mark of 25000 helped index to par initial gains. The daily price action resulted into bear candle carrying higher high-low, indicating breather after recent sharp up move. In the process, Nifty Midcap clocked a fresh All Time High.

* The formation of higher high-low after witnessing faster pace of retracement, highlights strength that makes us revised target of 25200 for coming weeks. In the process, 24400 would act as immediate support. Thus, buying would be the prudent strategy to adopt. Our positive bias is further validated by following observations

* A) The Bank Nifty has witnessed supportive efforts from 50 days EMA while Nifty index witnessed follow through strength post multiyear cup & handle breakout. Tracking in Banking and IT space bodes well for next leg of up move as cumulatively both indices carry >50% weightage in Nifty

* B) Net of Advance/Decline (Nifty500) bottomed out from its bearish extreme reading (-450) around Union Budget and made a sharp reversal

* C)India Vix which is a gauge of market sentiment, crashed 18% for the week as anxiety settled post Budget event, indicating that market participants are not expecting a significant volatility

* D) In US major sector rotation has taken place over past few weeks ahead of US Fed policy in coming week. Dow Jones and Russell 2000 small cap index both have given a significant breakout indicating that rally in US is broadening now

* Structurally, the formation of higher peak and trough signifies buying demand at elevated support base that makes us revise support base at 24400 as it is confluence of:

* A) 61.8% retracement of last week’s up moves 24074-24861

* B) 20 days EMA is placed at 24340

Nifty Bank : 51406

Technical Outlook

Day that was :

Nifty Bank inched up on Monday marginally as index failed to sustain intra day gains . Index gained 110 points or 0 . 2 % to settle at 51406

Technical Outlook :

* The Index opened higher on Monday tracking positive global cues and then rallied to surpass hurdle of 52000 in first half . However selling in large banks led index to give up almost 1000 points from high resulting in a bear candle with long upper shadow indicating profit taking at higher levels and extended consolidation . For a meaningful recovery, index need to sustain above 52000 levels . We expect index to undergo consolidation in the range of 49600 -52000 levels

* Going forward, key resistance is placed at 52000 being past two week highs while key support is placed at 49600 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema

* Price structure : We observe that index is undergoing retracement from overbought readings after 15 % rally . Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 9 % from highs and in current context 5 . 5 % correction is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation above 52 -week ema around 49500 levels

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