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Nifty : 22200

Technical Outlook

Day that was…

Equity benchmark taken a breather after three sessions up move ahead of US inflation data. The Nifty settled the Wednesday’s session at 22000 down 17 points. The market breadth remained in favour of advances with A/D ratio of 1.5:1 as broader market outperformed the benchmark. Sectorally, metal, PSU Bank, realty outshone while FMCG, auto took a breather

Technical Outlook

* The index started the session on a positive note. However, profit booking around 22300 levels dragged index lower and since then it oscillated in 100 points range. Consequently, daily price action resulted into a high wave candle, carrying higher high-low, indicating continuation of positive bias amid stock specific action

* We expect, index to head towards upper band of ongoing consolidation placed at 22400 wherein stock specific action would prevail. In the process, volatility would remain elevated as we sail through progression of election phases coupled with Q4 earning season. Thus, accumulating quality stocks on dips would be the prudent strategy to adopt as strong support is placed at 21700

* Key observations to during election phases

* A) Over past four elections, Nifty has undergone average 6% correction during polling phases. In current context index has corrected ~4% from life highs and remains in sync with empirical evidence.

* B) The India VIX has a tendency to rise ahead of Election and eventually fizzles out post election outcome as anxiety around the event settles down. During MAY 2019, rise in VIX resulted into decline in index that in turn helped Nifty to form a higher base and set the stage for next leg of up move

* Structurally, formation of higher peak and trough makes us confident to reiterate support base at 21700. Since start of CY24, intermediate corrections have got arrested within 4.5% and subsequently Nifty has recorded new high. In the current scenario, index has already corrected 4.3% from All Time High that also coincides with 100 days EMA.

Nifty Bank: 47687

Technical Outlook

Day that was…

The Nifty Bank index snapped two day winning streak after a low volume lack lustre trading session . Nifty Bank index concluded the session 172 points lower at 47687

Technical Outlook

* The Bank Nifty started the session on a flat note and then declined from psychological mark of 48000 amid weekly option expiry related volatility, before bouncing back from 47500 levels . Price action thus formed a small bear candle indicating pause near 20 -day ema amid ongoing recovery towards 48500 levels which is 50 % retracement of preceding eight session decline (49974 -46983 ) . We maintain stance of buying declines for target of 48500 in the short term based on following are key observations :

* Since late Jan’24 low of 44633 , index is following a well channeled up move forming higher bottoms in the vicinity of rising 100 -day ema (47050 ) . In Mondays session index respected this price behaviour

* Further, each of preceding three corrective declines measure 5% in magnitude

* Structurally, current decline from life highs is a healthy retracement and therefore does not alter positional bullish stance . We therefore expect that current decline would result into a higher base formation around 47000 followed by resumption of rally

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