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Nifty : 24502

Technical Outlook

Day that was…

Equity benchmarks endured its record setting spree over sixth consecutive week. Nifty concluded the week at 24502, up 8%. While broader market relatively underperformed. Sectorally, IT, FMCG, PSU outshone while metal, realty, PSU Banks took a breather

Technical Outlook:

* The index witnessed a rangebound activity and settled the week on a positive note tracking firm global cues. The weekly price action formed a small bull candle carrying higher high-low, indicating continuation of uptrend, albeit with a slowdown in momentum

* The elongation of rallies followed by shallow retracement while sustaining above 10 days EMA highlights inherent strength that bodes well for gradual movement towards 24800 in coming weeks. However, bouts of volatility amid overbought condition cannot be ruled out as weekly stochastic approached at 96 levels. Thus, temporary breather should not be considered as negative instead dips would offer incremental buying opportunity wherein immediate support is placed at 24100. We expect focus to be on sectoral churns and stock specific action as Q1FY25 earnings season picks up from coming week. Our positive bias is corroborated with following observations:

* A) The faster pace of retracement helped IT index to resolve out of 10 quarters cup & handle pattern, following rate cut expectations in US. Given the significant weightage of IT sector in Nifty, this could act as a cushion going forward

* B)Strong domestic fund flow, firm global setups and Budget expectations along with monsoon progression domestically would be key factors influencing market direction

* On the broader market front, Nifty midcap, small cap indices have gained 22% and 28%, respectively which hauled weekly stochastic oscillator in overbought territory (placed at 96). Thus, we recommend to be choosy in this segment as retracement of rally cannot be ruled out and could lead to minor profit booking

* Structurally, the formation of higher peak and trough supported by improving market breadth makes us revise support base upward at 24100 as it is confluence of

* A) 38.2% retracement of past three weeks up moves 23350-24592

* B) Last week’s low of 24140 coincided with 20 days EMA

Nifty Bank: 52279

Technical Outlook

Day that was :

Nifty Bank index closed session on a flat note on Friday as early gains were surrendered . Index closed at 52279

Technical Outlook :

* The index started the session on a flat note and then gained in early session, however prices failed to sustain at higher levels resulting in inverted hammer like candle indicating lack of follow through to Thursdays recovery from rising 21 -day ema . Over past six sessions, index has failed to sustain above previous session high . Hence sustainability above 52500 would indicate pause in downward bias and a bounce back towards upper end of consolidation range at 53500

* Going forward, holding immediate support and last week low of 52000 would extend ongoing consolidation while only a decisive breach of 52000 would be a sign of extended profit taking

* PSU banking stocks have witnessed extended profit taking/consolidation over few weeks and expected to form a higher bottom formation over next few sessions

* We revise short term support to last week’s low of 52000 which also coincide with rising 21 -day ema

* Price structure : We observe that index is maintaining its higher high -low formation on multiple time frames and remain in steady uptrend and short term declines are attracting buying support . Hence consolidation in the short term will help index to undergo higher base formation and work out of overbought readings

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