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Nifty : 25010

Technical Outlook

Day that was…

Equity benchmarks started the week on a buoyant note tracking buoyant global cues as US Fed signalled rate cut in September. Nifty settled Monday’s session at 25010, up 187b points or 0.75%. Market breadth remained firm with A/D ratio of 1.2:1.Sectorally, IT, Metal, Oil & Gas, Consumer Discretionary outperformed while PSU Bank took a breather

Technical Outlook:

* The index started the week on an firm note and closed above the psychological mark of 25000. The weekly price action resulted into bull candle carrying higher high-low, indicating continuation upward momentum

* The formation of higher high-low supported by sectoral rotation signifies elevated buying demand that makes us reiterate our positive bias and expect Nifty to head towards 25200 in coming weeks. In the process, stock specific action would prevail. Hence, buying on dips would be the prudent strategy to adopt as strong support is placed at 24600.

* Our positive bias is further validated by following evidences:

* A) Despite global volatility, Index has maintained its rhythm of not correcting more than 5% (pricewise) and two weeks (time wise) since beginning of CY24. Post such price/time correction Nifty has tendency to surpass life highs in each of the four instances

* B) Bank Nifty has managed to close above past two weeks high of 50800, indicating pause in downward momentum. Going ahead, follow through strength in Banking stocks would drive Nifty higher as Bank Nifty carries 32% weightage in Nifty

* C) The current up move is backed by improvement in market breadth as currently ~58% stocks of Nifty 500 universe are trading above their 50 days Average compared to past 2 week’s earlier reading of 48%

* D) Global headline indices, led by US are in steady uptrend and S&P 500 remains within 1% of life highs. Firm global cues act as cushion

* The broader market has undergone healthy retracement as Nifty Midcap and small cap have formed a higher base formation above 50 days EMA that has set the stage to challenge All Time High. Thus, focus should be on quality stocks with strong earnings

* The formation of higher high-low on the weekly chart makes us revise support base at 24600 as it is confluence of 20 days EMA coincided with 50% retracement of ongoing up move (24100-25043)

Nifty Bank : 51148

Technical Outlook

Day that was :

Nifty Bank started the week on a positive note on Monday led by positive global cues as recent Fed comments raised rate cut hopes . Index gained 214 points or 0 .42 % to close at 51148

Technical Outlook

* The Index started Mondays session on a positive note and then gained further towards 51300 before surrendering intraday gains . As a result price action formed a bull candle with higher shadow, albeit maintained higher high -low sequence .

* We maintain positive stance and expect index to gradually head towards 51800 levels . Hence, buying dips will be a prudent strategy . Meanwhile, medium term support for index is placed at 49650 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema c) August month low

* Price structure : A) We observe that index is undergoing healthy retracement from overbought readings after 15 % rally . Currently, index has retraced, post election, 21 session rally by 50 % over 30 sessions, indicating corrective nature of decline and would lead into higher bottom formation

* B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current context 7 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 200 -day ema around 48500 levels

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