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Nifty : 19674

Technical Outlook

* The index oscillated in 130 points range to settle unchanged as compared to open resulting in Doji formation indicating pause in downward momentum after last four session decline led prices in oversold readings on daily chart and near key support zone of 19500-19600

* Going forward we expect Nifty to hold strong support around 19500 followed by healthy consolidation in the broad range of 19500-20000 in current expiry week. Use dips as buying opportunity

* Structurally, ongoing decline/volatility is transitory in nature and part of the healthy retracement of three week rally (19223-20222) and should not be construed as negative rather an incremental opportunity to ride the uptrend

* On the broader market front, Midcap index has rallied >40% over past six months and currently undergoing a healthy retracement/consolidation. In a secular bull market secondary correction is a common phenomenon wherein historically 8-10% corrections provided incremental buying opportunity.

* Key support base at 19600-19500 is a confluence of:

* a) 61.8% retracement of current up move (19223- 20222), at 19605

* b) Presence of rising 50-day ema at 19550 and

* C) value of rising trendline connecting key swing lows of June and August 2023

* Breadth: Percentage of stocks above 50-dma sustained above 70% despite consolidation over past two weeks 

Nifty Bank: 44766

Technical Outlook

* The price action resulted in high wave candle for the week formed sizeable bear candle with shadows in either side indicating intra day volatility as prices attempted pull back from oversold zone

* We expect pause in current selling and supportive efforts to emerge in 44000 -44200 zone however index need to form a higher high -low on daily chart to indicate pause in downward pressure and meaningful reversal as Thursdays high at 45200 would act as immediate hurdle

* Structurally, Index has retraced past four week rally by 61 . 8 % this week leading daily stochastic close to oversold readings (reading of 44 )

* Our view is backed by following key observations

* On higher degree, index is consolidating in a broad range of 43600 -46300 since early August as it is digesting strong rally from March lows of 38613

* PSU banks continue to relatively outperform and could lend some support at lower levels

* Heavy weight private banks including HDFC bank are now oversold and back to their key supports thereby projecting limited downside

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