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Nifty : 22332

Technical Outlook

Day that was… Equity benchmarks started the week on a subdued note tracking muted global cues. The Nifty lost 160 points or 0.7% to settle the Monday’s session at 22332. Broader market relatively underperformed as Nifty midcap and small cap lost 0.4% and 2%, respectively. Sectorally, barring pharma all other indices ended in red weighed down by financials, metal, oil & gas

Technical Outlook

• Nifty started the week on a muted note and gradually inched southward as the day progressed. The daily price action formed a bear candle, indicating profit booking in recently run up stocks. Meanwhile, broader market underperformed on expected lines.

• Going ahead, we maintain our positive bias and expect Nifty to gradually head towards 22700 in coming week’s. Wherein, we expect large caps to relative outperform against the broader market as ratio of Nifty vs Nifty 500 has bottomed out. Thus, bouts of volatility owing to global development should be utilized as an incremental buying opportunity since immediate support is placed at 22200. Our positive bias is further validated by following observations:

• A) The Bank Nifty has witnessed a follow through strength post faster pace of retracement while Nifty IT witnessed supportive efforts from 50 days EMA (cumulatively Banking and IT carries 50% weightage in Nifty) that bodes well for next leg of up move

• B) buoyancy in global equities with steady domestic and foreign flow would act as tailwind for domestic equities

• C) The cool off in oil prices and Dollar index are likely to act as tailwind

• The market breadth is declining which is a sign of mean reversion in mid/small cap stocks from over bought trajectory. Mid and small cap indices have rallied ~35% since October 2023. Intermediate corrections to the tune of average 12% in Mid and small caps have been a bull market norm. At present 8% correction is behind us

• Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us to revise support base at 22200 as it is confluence of:

• Thursday’s panic low is placed at 22224

• 20 days EMA is placed at 22180

Nifty Bank: 47328

Technical Outlook

Day that was : The Nifty Bank declined for second session in a row led by profit taking amid concerns over deposit growth of some large banks and ahead of inflation numbers . Nifty Bank index declined 508 points or 1 % for the session

Technical Outlook :

• The Index started the session on muted note and then continued to decline led by profit taking in large banks . Price action thus formed a bear candle with lower high - low indicating profit taking near life highs after six session rally led index to overbought reading on daily time frame .

• Going forward, we reiterate our positive stance on index and expect it to challenge life highs of 48600 levels in the coming weeks . However, some bouts of volatility near life highs due to overbought readings on daily time frame would offer incremental buying opportunity with focus on large banks

• Meanwhile, we have upgraded short term support to 46900 levels which is confluence of 50 % retracement of past six session rally that coincides with rising 20 -day ema

• Structurally it is worth noting that each time Index has a tendency to challenge and surpass life highs after a base formation near rising 52 -week EMA . In current context index has already formed a strong base near 44600 levels . We expect index to maintain its rhythm and challenge life highs of 48636 in coming weeks

• Meanwhile, PSU bank index has hit fresh life high and expected to continue its relative outperformance on relative basis

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