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Nifty : 22443

Technical Outlook

Day that was…

* Equity benchmark concluded volatile session on a flat note as Nifty settled Monday’s session at 22443. The market breadth turned in favour of declines with A/D ratio of 1:2.2 as broader market relatively underperformed. Sectorally, IT, FMCG, Realty remained in limelight while PSU banks, Consumer durables, Metal took a breather

Technical Outlook:

* The index started the session on a positive note and gradually pared the gains as the day progressed. The daily price action resulted into inside bar confined within Friday’s trading range, indicating breather amid stock specific action

* We believe, the index is undergoing healthy retracement after recent up move that would help index to form a higher base and gradually set the stage to challenge 22800 in coming weeks. Eventually we expect, Nifty to surpass the 22800 mark and head towards our earmarked target of 23400 by June. In the process, bouts of volatility ahead of general election phase can not be ruled out amidst progression of Q4 earning season. Thus, utilising dips to accumulate quality stocks would be the prudent strategy to adopt. Our constructive bias is validated by following observations

A) Bank Nifty index has given a breakout from 3 ½ month consolidation indicating acceleration of up move. On relative front, Bank Nifty is expected to outperform Nifty

B) Contrary to adage of sell in May and go away, Indian equities have delivered positive returns in May month during General election years in four out of past five instances since CY1999. Minimum returns were 1.5% while average was 14%

C) Brent prices have given breakdown from five month rising channel indicating that upsides are capped around $92. Further declines towards 75-78 likely in coming month

* Formation of higher peak and trough makes us confident to retain support base at 22000 is based on confluence of:

a) 80% retracement of recent up move 21778-22794 

b) Rising trend line drawn adjoining rising trend line drawn adjoining Dec-23 to Jan 24 lows

Nifty Bank: 48895

Technical Outlook

Day that was :

* The Nifty Bank declined marginally on Monday amid profit taking in PSU banks after RBI proposal for additional provisions . Private banks relatively outperformed . Index closed at 48895 , down 28 points

Technical Outlook :

* Index commenced Monday’s session on tepi d note and then traded choppy for rest of the session in 49200 -48900 range, thus forming inside bar candle indicating extended breather after recent rally . Over past three sessions index is undergoing shallow retracement of preceding eight session rally by just 38 . 2 % , indicating inherent strength in uptrend

* We maintain our structural positive stance on index and expect Banknifty to eventually take out psychological hurdle of 50000 and head towards target of 51000 for the month of May 2024 . Meanwhile index is expected to relatively outperform . However, after recent 7 % rally index is expected to undergo higher base above 48000 levels which will set stage for next up move . Use buy on decline strategy with focus on corporate that are are expected to do wellKey observation has been that Bank Nifty/Nifty relative performance ratio chart indicates strong outperformance from Bank Nifty over next 3 - 4 months . Since 2008 , in all six instances, whenever relative ratio line turned up from cycle low, Bank Nifty outperformed by 5 % over three -four months period

* Key observation has been that Bank Nifty/Nifty relative performance ratio chart indicates strong outperformance from Bank Nifty over next 3 - 4 months . Since 2008 , in all six instances, whenever relative ratio line turned up from cycle low, Bank Nifty outperformed by 5 % over three -four months period

* We revise key immediate support for Index at 48000 as it is confluence of : 

* Last Fridays low 

* Value of rising 20 -day ema at 48238 

* 50 % retracement of past six session gains at 48026

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