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Nifty :23914

Technical Outlook

Day that was…

Equity Benchmark ended monthly expiry session on a subdued note tracking muted global cues. Nifty lost 360 points or 1.5% to settle the session at 23914. However, market breadth remained strong with A/D ratio of 1.25:1 as broader market outperformed the benchmark. Sectorally, PSU Banks outshone while IT, auto, Consumer Durables took a breather

Technical Outlook:

* The index failed to surpass past 3 sessions high of 23350 and gradually drifted downward on the breach of three sessions low of 24125. Consequently, daily price action formed a sizable bear candle carrying lower high-low, indicating extended breather

* The index is witnessing slower pace of retracement as over past 3 sessions it retraced merely 38% of preceding 2 sessions up move (23263-24351). We believe, ongoing consolidation would make market healthy by forming a higher base that would eventually set the stage to challenge immediate hurdle of 24500 in coming weeks. In the process, we expect Nifty to hold the key support threshold of 23700- 23500. Hence, dips should be utilized to accumulate quality stocks in a staggered manner. Our constructive view is based on following observations:

* a) The slower pace of retracement after impulsive move indicates robust price structure that bodes well for extension of upward momentum

* 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 23700- 23500 zone as it is confluence of:

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

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

* C) 200 days EMA is placed at 23657t of current rally (23263-24350), placed at 23675

Nifty Bank : 51906

Technical Outlook

Day that was :

The Bank Nifty edged lower tracking weakness in global markets . Bank Nifty lost 0 .75 % to settle the session at 51907 . However, PSU Banking index relatively outperformed the benchmark by gaining 0.9%

Technical Outlook

* The index started the session on a positive note and surpassed the key resistance of 52600 mark . However, profit booking from higher levels dragged index lower . The daily price action formed a bear candle with shadows on either side, indicating rise in volatility

* We believe, index is forming a higher base by consolidating in a narrow over past 3 sessions . A decisive close above 52600 would confirm the resumption of uptrend that can result into sustaining aboextended up move towards 53500 . The Bank Nifty index has been ve the breakout area of 9 weeks falling trend line, indicating pause in downward momentum . 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

* Despite weakness in the benchmark PSU bank index outperformed and formed a strong bull candle . Going ahead, we expect PSU Bank index to resolve higher and surpass September 2024 high of 7050

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