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Nifty : 24139

Technical Outlook

Day that was…

Equity benchmarks edged lower tracking muted global cues. Nifty settled Tuesday’s session at 24139, down 208 points or 0.85%. Market breadth turned negative with A/D ratio of 1:2.7 as Nifty smallcap relatively underperformed. Sectorally, Consumer Durables, Pharma, relatively outperformed while financials, metal, Oil & Gas witnessed extended profit booking Technical Outlook:

* The index started the session on a subdued note and gradually inched southwards as intraday pullbacks were short lived. The daily price action resulted into bear candle carrying lower high-low, indicating corrective bias

* The lack of follow through strength above last week’s high (24400) signifies prolonged consolidation in the broader range of 24400-23800. We believe, markets would await for direction from global markets coupled with US inflation data. Only a decisive close above 24400 would lead to extended pullback towards 24700 in coming weeks. Traders should note that, intermediate correction is a part of structural up move which offers incremental buying opportunity

* Structurally, key point to highlight is that since Oct-2023 Nifty has not corrected for more than 2 weeks wherein intermediate correction have been limited to 5%. In the current scenario as well, we expect index to maintain same rhythm and stage a pullback as Nifty has already corrected 5% over past 2 weeks

* India VIX is key monitorable from risk perspective. Last week VIX has cooled down significantly from resistance zone of 23 indicating lower risk perception in short term short term

* Globally, Nikkei and US indices have also bounced from oversold readings and expected to consolidate

* The formation of lower high-low on the weekly chart makes us revise support at 23800 as it is confluence of 50 days EMA coincided with last week’s low

Nifty Bank : 49831

Technical Outlook

Day that was :

Nifty Bank index lost 746 points or 1 .48 % on Tuesday to settle at 49831 . Large private and public banks weighed the index down post inflation numbers coming more or less within expected range

Technical Outlook :

* The Index started the session on a weak note led by HDFC Bank and then continued to head south amid profit taking . In the process index gave up past three session gains in single session while facing strong resistance at 50 -day ema (50800 ) . Index is maintaining its lower highs on weekly time frame over past five weeks maintaining its corrective bias . On Wednesday, amid weekly expiry we may expect index to attempt a pull back and more of range bound action

* Going forward, key resistance is placed now at 50800 levels which is current week high and value of 50 -day ema while a follow through selling below last week low of 49600 would indicate extended correction in coming sessions towards 48800 -48500 which is confluence of a) 61 . 8 % retracement of post election rally and b) value of rising 200 -day ema (48270 )

* Price structure : A) We observe that index is undergoing healthy retracement from overbought readings after 15 % rally . Currently, index has retraced, post election, 21 session rally by 50 % over 22 sessions, indicating corrective nature of decline and would lead into higher bottom formation

* B) Since beginning of 2024 , after each 15 % rally index has a tendency to correct around 8 - 9 % from highs and in current context 7 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 200 -day ema around 48500 levels

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