IGI Logo

Nifty : 21957

Technical Outlook

Day that was…

Equity benchmark extended losing streak over fifth session tracking FII’s outflow. The Nifty plunged 345 points to settle the session at 21958. The market breadth turned in favour of decline with A/D ratio of 1: 4.5 as broader market bore the brunt of sell off in the index heavy weights. Sectorally, barring Auto, all major indices ended in red weighed by oil & gas, financials, metal

Technical Outlook:

* The index started the session on a subdued note and gradually inched southward as the day progressed since intraday pullbacks were short lived. As a result, contrary to our expectation, Nifty breached the psychological mark of 22000. consequently, daily price action formed a bear candle carrying lower high-low, indicating extended corrective bias on the breach of 50 days EMA

* Going ahead, we expect index to trade with a corrective bias as long as it maintains a lower high-low formation. Only a decisive close above previous session’s high would confirm the pause in downward momentum and open the door for next leg of up move

* Key point to highlight since start of CY24 is that, the intermediate corrections have got arrested within 4.5% and subsequently Nifty has recorded new high. In the current scenario, 4.5% correction will mature around 21700-21800 zone which also coincides with 100 days EMA. Thus, we advise traders to refrain from creating aggressive short position near key support area as daily stochastic oscillator has approached oversold condition (placed at 10). In the process, bouts of volatility ahead of general election phase can not be ruled out amidst progression of Q4 earning season.

* Key point to highlight is that the India VIX (which gauge the fear in the market) has recorded 52 weeks high of 19.17, indicating rise in volatility. Historically, India VIX has a tendency to rise ahead of Election and eventually it fizzles out post election outcome. 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. Thus, ongoing corrective decline should be capitalized to accumulate quality stocks amid progression of earning season

On the upside 22500 would now act as immediate resistance as it is confluence of:

 a) 61.8% retracement of current decline 22794-21932

b) current week’s high is placed 22588

Nifty Bank: 47488

Technical Outlook

Day that was :

The Nifty Bank index declined for seventh session in a row as investors resorted to profit taking in recently run up banking heavyweights amid weekly Nifty expiry . Nifty Bank index declined 533 points or 1 . 1 % to close at 47488

Technical Outlook :

The Bank Nifty started the session on a negative note and continued to decline further for rest of the session below 48k, contrary to expectation . Index formed a large bear candle with lower high -low indicating continuation of corrective bias and in the process declined 5 % over past seven sessions from life highs of 49974 leading daily stochastics to reading of 5 . Prices have thus approached key support zone of 47000 -47500 , holding which a technical bounce back from oversold readings is on the cards over next few sessions

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 )

* Further, each of preceding three corrective declines measure 5% in magnitude, which has already been achieved by current decline at Thursday’s low of 47500

* Going by this tendency and pattern, supportive efforts In the vicinity of 47000 -47500 is expected followed by a base formation

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 followed by resumption of rally

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

SEBI Registration number INZ000183631