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Nifty :24276

Technical Outlook

Day that was…

Equity benchmark continued to inch upward over second session in a row tracking firm global cues. Nifty settled the session at 24276, up 145 points or 0.6%. Broader market outperformed as Midcap, Smallcap gained 1%, each. Sectorally, Consumer Durables, auto, metal outshone while FMCG, PSU Banks remained muted

Technical Outlook:

* The index started the session on a positive note and gradually inched upward as the day progressed. The daily price action resulted into bull candle carrying higher high-low, indicating continuation of positive bias.

* We believe, past six sessions healthy consolidation has helped index to form a higher base that would set the stage to challenge upper band of consolidation placed at 24500 and eventually head towards 25000 by December. Hence, buying on dips would be the prudent strategy to adopt as immediate support is placed at 23700. Our constructive view is based on following observations:

*  a) Six weeks corrective phase in Bank Nifty got retraced back in just 2 weeks. Faster pace of retracement signifies structural improvement. Within the segment, PSU banks outperformed by gaining ~5%

* b) Past three decades historical data exhibit that December seasonality favour bulls with 73% success rate wherein average returns have been to the tune of 3%

* c) Significant improvement in market breadth data bodes well for extension of ongoing pullback as currently 40% stocks of Nifty 500 universe are trading above 50 days SMA compared to mid-Nov reading of 12%

* d) After facing stiff resistance from 108 levels US Dollar Index drifted below 106. Further decline would result into risk on sentiment in equities tracking its inverse correlation

* 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 23700- 23500 zone as it is confluence of:

*  a) 61.8% retracement of current rally (23263-24350) at 23675

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

* c) 200 days EMA is placed at 23572

Nifty Bank : 52109

Technical Outlook

Day that was :

The index edged higher tracking firm global cues . Bank Nifty concluded volatile session on a flat note . PSU Banking index relatively underperformed the benchmark

Technical Outlook

* The index started the week with a subdued note . However, fag end buying demand helped index to recover intraday losses . The daily price action formed a doji like candle over second consecutive session, indicating continuation of uptrend amid elevated volatility

* The index is forming a higher base after witnessing faster retracement wherein it retraced six week’s corrective phase in just two weeks . We believe, ongoing healthy consolidation has paved the way to challenge the immediate hurdle of 52600 and gradually head towards 53500 in coming weeks as it is 80 % retracement of past 2 months decline (54467 - 49787 ) . The upward inching ratio chart of Bank Nifty/ Nifty suggest continuation of relative outperformance going forward . Meanwhile, key support is placed at 50400 as it is 80 % retracement of current up move (49787 -52760 )

* 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 has been undergoing a higher base formation above 100 days EMA . Going ahead, we expect PSU Bank index to resolve higher and surpass September 2024 high of 7050

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