IGI Logo

Nifty :24195

Technical Outlook

Week that was…

Equity Benchmark took a breather past two sessions sharp up move. Nifty settled Tuesday’s session at 24195, down 27 points. However, market breadth remained in favour of advances with A/D ratio of 21.4:1 as broader market outperformed. Sectorally, IT, FMCG outperformed while auto, pharma underwent profit booking

Technical Outlook:

* The index started the session on a positive note. However, failed to capitalize up move, resulting pared initial gains and eventually settled on a flat to negative note. The daily price action resulted into bear candle, indicating breather after 1000 points sharp up move seen over past two sessions.

* Going ahead, we believe couple of days breather would make market healthy by forming a higher base that would pave the way to head towards 24500 mark in coming weeks. In the process, we expect Nifty to hold the key support threshold of 23500. Hence, accumulating stocks with strong earnings on dips would be the prudent strategy to adopt in a staggered manner. Our constructive view is based on following observations:

* a) Faster pace of retracement at 52 weeks EMA, indicates structural improvement in the short term as six sessions decline got retraced in just two sessions.

* b) Past three decades historical data exhibit that December months seasonality favours bulls with 73% success rate wherein average returns have been around 3%

* c) The Index has a tendency to reverse the course of action on arrival of key Fibonacci number. Current correction has completed 8 weeks

* d) Breadth indicator (% of stocks above 50 days SMA in Nifty 500 Universe) has bounced from its bearish extremes of 12. Meanwhile, weekly stochastic recorded bullish crossover amid oversold conditions, indicating impending pullback

* Structurally, since covid lows, average intermediate bull market corrections have been to the tune of 10% in Nifty and 9% in Bank Nifty. With 11% correction in Nifty and 8% correction Bank Nifty is already in place, we expect index to maintain the same rhythm and stage a pullback in coming weeks while holding key support zone of 23500 as it is confluence of:

* a) 80% retracement of current rally (23263-24350), placed at 23480

* b) Long term rising trend line that has been held over past 2 years

* c) 200 days EMA is placed at 23555

Nifty Bank : 52191

Technical Outlook

Day that was :

Index settled the Tuesday’s volatile session on a flat note at 52192 , down 16 points amid mixed global cues . The PSU Banking index relatively outperformed the benchmark by gaining 0.2%

Technical Outlook

* The index began the session on a positive note . However, profit booking from upper band of consolidation at 52600 dragged index lower . The daily price action formed a bear candle carrying higher high -low, Indicating breather after recent sharp up move .

* The Bank Nifty index has been sustaining above the breakout area of 9 weeks falling trend line, indicating pause in downward momentum . Going ahead, follow through strength along with a decisive close above 52600 would confirm the resumption of uptrend . The ratio chart of Bank Nifty/ Nifty has been pointing upward, indicating relative outperformance that makes us believe, index would eventually challenge the upper band of consolidation (placed at 52600 ) and head towards 53500 . Meanwhile, key support is placed at 50000 as it is 200 days EMA coincided with 80 % retracement of recent up move (49787 -52555 )

* Structurally, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 3 - 4 weeks before unfolding next leg of up move . In current scenario, with ~ 8 % correction already in place, we expect Bank Nifty to maintain the same rhythm and stage bounce in coming sessions

* The PSU bank index taken a breather after past two sessions up move that resulted into a doji like candle . Going ahead, we expect PSU Bank index to resolve higher and surpass September 2024 high of 7050

Please refer disclaimer at https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631