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Nifty : 25389

Technical Outlook

Day that was..

The strong buying across sector heavyweights in late hour of trade steered Nifty to new highs to post strongest gains in recent time, contrary to our expectations. Private Banks, IT stocks spearheaded gains to take Nifty 470 points or 1.89% higher at 25389. Rate cut optimism in US and other parts of the world led to risk on sentiments on domestic bourses as well. Mid and small cap indices also gained 1% each

Technical Outlook:

* The Nifty had a firm start led by global cues however last hour buying led to acceleration of upward momentum and led Nifty to surpass 7 session correction in faster time, thus forming strong bull candle on daily chart. Faster retracement and strong institutional buying indicate strength and positive bias and in the process also formed a short term higher low at 24750 being value of rising 20-day ema

* Going forward, follow through action and sustainability above 25300 would indicate further acceleration of gains towards 25800 levels in gradual manner while short term support is being revised upwards to 24750 levels. Buying dips strategy should be focused

* key observations that shape our outlook are as follows:

* a) Private banks showing signs of strength and with their significant weightage likely to drive index higher

* b) Historically, September has been a month with elevated volatility both domestically and globally. However, it is also worth noting that September volatility has been buying opportunity as Oct-dec is usually a good period for equities

* c) Brent prices continue to head lower after breakdown from 10 month consolidation and augurs well from CAD perspective

* d) strong flows for august reiterate the strong domestic liquidity situation and incremental FII flow would be an added tailwind

* e) Below surface many sectors/stocks have witnessed cool off in prices over past month or so and forming a higher base above their long term mean. PSU banks is one of the case to consider here

Nifty Bank : 51772

Technical Outlook

Day that was :

Nifty Bank surged in lat e hour trade led by buying across index heavyweights with private banks outperforming . Lower bond yields also helped sentiments . Index closed session at 51010 , down 262 points or or 0 .30 %

Technical Outlook :

* The index started session on positive note tracking firm global cues and then traded sideways before last hour buying across heavyweights lifted index to six week highs . Buying in private banks triggered the up move, resulting in a strong bull candle formation wherein index held above 50 - day ema (51000 ) over past three sessions . In the process, index is 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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