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Nifty : 19732

Technical Outlook

• The index resolved out of two months falling trend line with a positive gap and sustained above its 50 days EMA throughout the week, indicating rejuvenation of upward momentum. The weekly price action resulted into a bull candle carrying higher high-low, indicating continuation of positive momentum. In the process, Nifty midcap and small cap indices clocked a fresh All Time High, highlighting relative outperformance

• The index has rallied >1000 points over past three weeks. Thus, couple of days breather owing to profit booking in banking heavy weights can not be ruled out which would pave the way for next leg of up move towards psychological mark of 20000 in coming weeks as it is 80% retracement of Sept-Oct decline (20222- 18838), placed at 19945. Hence, any dips form hereon should note be construed as negative, instead capitalize it as buying opportunity as strong support is placed at 19400 which we expect to hold. Our positive bias is further validated by following observations:

• A) Revived buying demand in the broader market backed by improving market breadth signifies inherent strength

• B) Crude Oil: The acceleration of downward momentum post breach of October low signifies weakenss in Crude that would in turn act as tailwind for equity

• C) Further drop in dollar index along with cool off in global yields would provide impetus for acceleration of up move

• Sectorally, Auto, Pharma, IT, Metal & Infra, PSU to outperform in the coming week

• On the stock front, in large cap we prefer HCL Tech, L&T, Canara Bank, SBI Life, Maruti Suzuki, Dr Reddy, Tata Steel, Titan while in midcaps Lic housing finance, BDL, Coforge, JK Cement, CIE India, VTL, Zydus life, NAM India are looking good

• The sequence of higher lows signifies buying demand at elevated support base that makes us revise the support base upward at 19400 as it is 50% retracement of past two weeks rally (18838- 19875) coincided with 100 days EMA placed at 19314 and past two week’s low of 19330

Nifty Bank: 43584

Technical Outlook

• The weekly price action resulted in a bear candle with higher shadow as prices reacted almost 1000 points from high of 44400 indicating pause in upward momentum . Index however held above prior week’s low and immediate support of 43200 levels

• Going forward, holding immediate support of 43200 would keep pull back options open while last weeks high of 44400 would be short term hurdle . We expect consolidation in the range of 43200 -44400 in coming week . Only a decisive close below 43200 would indicate extended profit booking

• Key short term support is placed at 43200 which we expect to hold, as it is a confluence of :

• 50 % retracement of past two weeks up move (42105 -44056 ) placed at 43080

• value of rising 200 days ema is placed at 43272

• Structurally, Index is in the process of undergoing a retracement of March to July rally while pricing in various negatives in the process . So far index retraced 18 week rally by 50 % over 17 week correction indicating shallow nature of retracement . Since covid lows index held 52 - week ema (42700 ) on three occasions, followed by new high in each case in subsequent quarters . We expect same rhythm to be maintained

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