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Nifty : 25052

Technical Outlook

Day that was…

Nifty recorded new highs intra day before late hour profit taking resulted index to close at 25052, up 35 points. Midcap and Small cap indices closed flat indicating lack of strong broader market participation. Sectorally, IT and Pharma relatively outperformed with gains >1%

Technical Outlook:

* The index gained momentum led by IT heavyweights after muted start before profit taking took place in last hour. Index thus formed a high wave candle which indicates some profit taking at life highs and ahed of monthly expiry

* The sustenance above 25000 mark supported by sectoral rotation signifies inherent strength that makes us reiterate our positive bias and expect Nifty to head towards 25200 in coming weeks. In the process, stock specific action would prevail. Hence, buying on dips would be the prudent strategy to adopt as strong support is placed at 24600.

* Our positive bias is further validated by following evidences:

* A) Despite global volatility, Index has maintained its rhythm of not correcting more than 5% (pricewise) and two weeks (time wise) since beginning of CY24. Post such price/time correction Nifty has tendency to surpass life highs in each of the four instances

* B) Bank Nifty has managed to close above past two weeks high of 50800, indicating pause in downward momentum. Going ahead, follow through strength in Banking stocks would drive Nifty higher as Bank Nifty carries 32% weightage in Nifty

* C) The current up move is backed by improvement in market breadth as currently ~58% stocks of Nifty 500 universe are trading above their 50 days Average compared to past 2 week’s earlier reading of 48%

* D) Global headline indices, led by US are in steady uptrend and S&P 500 remains within 1% of life highs. Firm global cues act as cushion

* The broader market has regained upward momentum after undergoing healthy retracement above 50 days EMA that has set the stage to challenge All Time High. Thus, focus should be on quality stocks with strong earnings

* The formation of higher high-low on the weekly chart makes us revise support base at 24600 as it is confluence of 20 days EMA coincided with 50% retracement of ongoing up move (24100-25043)

Nifty Bank : 51143

Technical Outlook

Day that was :

Nifty Bank snapped two day winning streak amid monthly expiry related moves . Index settled session at 51143 , down 135 points or 0 .26 %

Technical Outlook :

* The Index started the session on a subdued note tracking neutral global cues and then traded choppy in the band of 51050 -51250 levels . Price action formed an inside bar indicating pause . Past two week pull back from oversold trajectory has been time consuming and indicates that index will head higher only gradually amid loss of momentum

* We maintain positive stance and expect index to gradually head towards 51800 levels . Hence, buying dips will be a prudent strategy . Meanwhile, medium term support for index is placed at 49650 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema c) August month low

* 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 30 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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