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Nifty : 25357

Technical Outlook

Week that was..

The Nifty reclaimed new highs as rate cut hopes and benign inflation expectations helped by good monsoon and lower brent prices boosted on sentiments. Strong FII inflows augmented robust domestic liquidity situation, that helped Nifty to gain 2% (25356) for the week, ahead of US Fed meeting next week. Nifty Mid cap and Small cap indices gained 2.8% and 1.2% respectively

Technical Outlook:

* The Nifty formed a strong bull candle on weekly time frame as it completely reversed past week’s losses, in faster time, indicating continuation of uptrend. Going forward, we expect index to sustain its upward trajectory and gradually head towards 25800 while key support is placed at last week lows of 24750 levels. While volatility around Fed Meeting cannot be ruled out, we advise to deploy buy on dips approach

* Our view is anchored upon following key observations:

* Private banks showing signs of strength and with their significant weightage likely to steer Nifty higher

* Sectorally, BFSI, IT, Metals, Consumption are expected to outperform

* Liquidity: FIIs have been net buyers in four out of past five sessions. With prospects of rate cuts in US, we expect FII money returning to EM and India stands to benefit significantly. This is incrementally positive with already robust domestic liquidity

* September seasonality favours buying dips: historically, September volatility with average of 3% decline has provided buying opportunity as 3M forward returns have been around 7% with 78% probability

* Brent: Prices continue their down trend after breakdown from one year consolidation. Expect prices to head towards $67 over coming months while upsides capped at $80

Nifty Bank : 51938

Technical Outlook 

Week that was:

Nifty Bank eked out marginal gains to end the week on positive note as rate cut expectations in US lifted sentiments . Index gained 2 . 6 % for the week to close at 51938 , led by private banks

Technical Outlook:

* The index started session on muted note and then gradually headed higher to close near highs . Price action for the day formed a high wave candle with longer lower shadow indicating intraday dips getting bought into . During the week, buying in private banks triggered the up move, resulting in a strong bull candle formation wherein index held above 50 -day ema (51000 ) and currently poised at neckline (inflection point at 51800 ) of a potential bullish reversal Inverse head & shoulders pattern on daily chart (refer chart) .

* In coming sessions, follow through buying above 51800 would indicate further strength that would lead index towards 52600 which is 80 % retracement of July -August decline (53357 -49655 ) . Meanwhile, a formation of higher high -low indicate positive bias in coming session with elevated support base at last two week’s identical low of 50400 levels

* Private Banks leading PSU peers, Most private banks have undergone base formation over past few weeks and expected to outperform PSU peers

*  Price structure : A) With Thursdays up move index is forming a higher bottom as compared to August lows and poised for a breakout from bullish reversal pattern indicating further upsides B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs resulting in higher bottom . In current context, index corrected 7 % from highs and retraced post election five week rally by 50 % over 10 weeks indicating slow retracement and robust price structure

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