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Nifty : 24718

Technical Outlook

Week that was…

Equity benchmarks has taken a breather after 8 weeks consecutive rally. Nifty settled week at 24718, down 0.5%. In the process, Nifty Midcap reactively outperformed. Sectorally, Energy, Pharma outshone while IT, auto, realty took a breather

Technical Outlook:

* The index recorded fresh All Time High of 25078. However, profit booking from higher levels dragged index around 24700 mark while discounting prospects of interest rate cut in US in September. Consequently, weekly price action resulted into small bear candle carrying higher high-low, indicating breather after recent sharp up move. Global volatility weighed on sentiments leading most major equity indices to decline

* In the coming session Nifty is likely to witness gap down opening tracking weak global cues. Going ahead, we expect index to consolidate in the broader range of 24000-25000 wherein stock specific action would continue. Key point to highlight is that, last week’s subdued activity amid overbought conditions signifies pause in upward momentum after 18% rally seen over past 8 weeks (off election outcome low). Further, negative divergence on the weekly stochastic oscillator suggests temporary breather in coming week.

* In a structural bull market secondary correction is a common phenomenon. Thus, extended breather from hereon cannot be ruled out. However, investors should focus on quality stocks with strong earnings as the strong support is placed at 24000

* On the broader market front, Midcap and small cap indices have rallied 25% and 28% from election low. As a result, both indices are approaching price parity of Oct23-Feb24 rally, indicating possibility of temporary breather at life highs can not be ruled out. Hence, stock specific action should be in focus amid ongoing earning season

* Structurally, the formation of higher peak and trough signifies buying demand at elevated support base that makes us revise support base at 24000 being confluence of 61.8% retracement of past six weeks up move 23350-25078 coincided with 50 days EMA

Nifty Bank : 51350

Technical Outlook

Day that was :

Nifty Bank declined on Friday amid weak global cues as US economic data raised fears of economic slowdown . Index closed down by 213 points or 0 . 4 % at 51350 , relatively outperforming Nifty . PSU banks index underperformed with decline of 1 . 7 % ahead of some key earnings

Technical Outlook :

* The Index started the session with a gap down action around 51000 and then attempted bounce back in first half while surrendering intra day gains towards end . Index thus formed a lower high -low despite attempt to hold 51 k levels . Bias continues to remain negative with strong hurdle at 52000 mark for coming week

* In coming week, weak global cues would continue to weigh on sentiments and sustainability above previous session highs would indicate pause in down ward momentum

* Index breaching last week’s low of 50500 would indicate extended correction towards key medium term support for placed at 49600 which is confluence of a) 50 % retracement of post election rally and b) value of rising 100 -day ema

* 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 just 38 . 2 % over 19 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 5 . 5 % decline is done . Hence going by historical rhythm further correction cannot be ruled out which would eventually result into a higher bottom formation around 100 - day ema around 49600 levels

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