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Nifty : 24971

Technical Outlook

Day that was…

The benchmark concluded volatile session on a subdued note tracking muted global cues. Nifty lost 86 points to settle the session at 24971. However, despite corrective bias in the benchmark smallcap index settled on a flat note. Sectorally, NBFC, Oil & Gas, Realty while auto, IT extended breather

Technical Outlook:

* The index started the session on a positive note however failed to capitalise initial up move and eventually settled on a subdued note. As a result, daily price action resulted into small bear candle carrying lower high-low, indicating extended consolidation amid stock specific action.

* The lack of follow through strength signifies prolonged 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 consolidation would help index to form a higher base above 50 days EMA that 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.

* 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 72-80 range

Nifty Bank : 51801

Technical Outlook

Day that was :

In tandem with the benchmark Nifty Bank index taken a breather amid muted global cues and settled the session at 51801 , down 0 . 2 % . In the process, PSU Bank index settled volatile session remained unchanged

Technical Outlook :

* The index pared initial gains and gradually drifted downward as the day progressed . As a result, daily price action formed a small bull candle, indicating breather after recent relative outperformance

* Going ahead, we expect Bank Nifty to endure its relative outperformance and gradually head towards 52400 . Structurally, the BankNifty has once again respected the long -term rising support 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 . Meanwhile, potential of lower interest rates are expected to act as tailwind for banks

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