The index opened with a gap-down, and subsequent intraday bounces were sold into - ICICI Direct
Nifty :24173
Indian equity benchmarks concluded the weekly expiry session on a negative note, weighed down by escalating geopolitical tensions in the Middle East and a subsequent rise in crude oil prices. The Nifty 50 settled at 24,173, shedding 205 points. Market breadth turned unfavorable with an (A/D) ratio of 1:2. The broader markets mirrored this weakness, as the Nifty Midcap and Smallcap indices declined by 0.40% and 0.70%, respectively. On the sectoral front, barring Pharma and Chemicals, all major indices closed in the red, with Auto, BFSI, and Realty emerging as the primary laggards.
Technical Outlook
* The index opened with a gap-down, and subsequent intraday bounces were sold into. This resulted in a bearish daily candle with a long upper shadow, signaling profit booking at higher levels.
* Key point to highlight, the index extended its consolidation phase with a "lower high-low" structure for the second consecutive session. This follows a robust ~2,400-point rally over the preceding three weeks, suggesting a temporary pause in the upward momentum.
* Amidst this consolidation we expect stock specific activity to remain in focus ahead of Q4 FY26 earnings season. Notably The Nifty Midcap has relatively outperformed the benchmark Nifty 50, followed by the ratio chart (Nifty Midcap/Nifty) breaking above its December 2024 swing high. This breakout indicates a decisive shift in leadership toward mid-sized companies.
* Addition to that Market breadth seen significant improvement as the current reading of % stocks trading above 50- and 200-days SMA has jumped to 74% and 40% compared to last month reading of 15%, signaling that mid and long-term trends are turning bullish across various sectors.
* We view this current decline in Nifty as a healthy consolidation rather than a structural correction; that will further make market healthy and set a stage for the next leg of the rally toward the 24,800 mark, aligned with the 200-day EMA.
* Meanwhile, the Stochastic Oscillator on weekly timeframe has entered overbought territory with a reading of ~89, indicating possibility of profitbooking in near-term. however broader structure remains positive and intact.
* Thereby any such "cool-off" should not be construed as a negative but rather as a healthy consolidation of recent gains. Hence any decline from current level should be used to accumulate quality stocks supported by strong Q4 earnings as strong support is placed at 23700, being 38.2% retracement of current upmove (22182-24601).
* From a global market perspective, the S&P 500's recent breach of the historic 7,000 level and the Nasdaq’s push to all-time highs signal robust momentum. We expect the Indian markets to mirror this trend with significant 'catch-up' activity.
Key Monitorable:
A.Q4 earning season
B.Further decline in Crude, US Dollar Index
Intraday Rational:
* Trend – Breather post sharp 11% rally over 13 trading session, indicating temporary pause in upward momentum
* Levels - Sell around yesterday high and 50% retracement of 2 days decline
Nifty Bank :56314
The Bank Nifty Index ended the day on a negative note tracking the subdued global cues, settled at 56314 down 1.42%
Technical Outlook:
* Index started the day with gap-down action and continued to remain southward forming lower high lower low till last hour of trade. The daily price action resulted into Bearish candle indicating profit booking at higher levels.
* Key point to highlight is that Index has been consolidating in vicinity of 200-day EMA (56700), indicating breather after rally of 15% seen from 2 nd April low of 49950. which had pushed momentum stochastic oscillator in weekly time-frame into overbought condition with a reading ~88, indicating possibility of near-term breather that would set stage for next leg of up move.
* We believe, ongoing breather will make market healthy and set the stage to gradually resolve higher towards 57800 in the coming weeks being previous support will now act as resistance (change of polarity principle)
* Hence any decline from current level should be used to accumulate quality banking stocks backed by strong Q4 earnings as strong support is now placed around 55800 being 10-day EMA coinciding with last Fridays low. Key monitorable will be Banking heavy weights companies reporting their results in the coming sessions.
* The Nifty PSU Bank underperformed the benchmark and closed on negative note. Formation of lower high lower low suggest profit booking at higher levels. Immediate support is placed around 8500 levels being 50% retracement of current rally (7833-9095).
Intraday Rational:
* Trend- Breather post sharp 15% rally over 13 trading session, indicating temporary pause in upward momentum
* Levels- Sell around yesterday high and 50% retracement of 2 days decline
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