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Nifty :24457

Technical Outlook

Day that was…

Equity benchmark endured its winning streak over third session in a row tracking firm Asian cues. Nifty gained 181 points to settle the Tuesday’s session at 24457. Market breadth remained sturdy with A/D ratio of 2.6:1 as broader market relatively outperformed. Sectorally, barring FMCG and pharma, all major indices ended in green led by financials, metal, oil&gas

Technical Outlook:

* Index staged a strong rebound after initial blip as intraday dips were short lived. Consequently, daily price action resulted into bull candle with lower shadow, indicating continuation of positive bias.

* The formation of higher high-low signifies buying demand at elevated support base that makes us confident to believe that index would challenge upper band of consolidation placed at 24500 and eventually head towards 25000 by the end of December. Hence, accumulating quality stocks on dips would be the prudent strategy to adopt as immediate support is placed at 23800. Our constructive view is based on following observations:

* a) Bank Nifty has recorded breakout from past 2 months consolidation (52500-49800). Revived traction in banking space would provide impetus to subsequent move in Nifty

* b) Past three decades historical data exhibit that December seasonality favour bulls with 73% success rate wherein average returns have been to the tune of 3%

* c) Significant improvement in market breadth data bodes well for extension of ongoing pullback as currently 47% stocks of Nifty 500 universe are trading above 50 days SMA compared to mid-Nov reading of 12%

* On the broader market front, strongest pullback helped Nifty midcap and small cap index (7% and 10%, respectively) to resolve out of past 10 weeks downward slanting trend line, indicating conclusion of corrective phase that augurs well for next leg of up move

* Structurally, since covid lows, average intermediate bull market corrections have been to the tune of 10% in Nifty and 9% in Bank Nifty. Both indices have staged a strong pullback after 11% and 8% correction respectively. As a result, we expect index to maintain the same rhythm and stage a pullback in coming weeks while holding key support zone of 23800 as it is confluence of:

* a) 50% retracement of current rally (23263-24481) at 23872

* b) last week’s low is placed at 23873

Nifty Bank : 52695

Technical Outlook

Day that was :

The index continued to inch northward over third consecutive session tracking firm global cues . Bank Nifty concluded the session at 52695 , up 1 . 1 % . Nifty PSU Bank index relatively outperformed the benchmark by gaining 2 . 6 %

Technical Outlook

* The index started the session with a positive bias and gradually inched upward as the day progressed . The daily price action formed a strong bull candle carrying higher high - low, indicating continuation of uptrend

* The index regained upward momentum after forming a higher base above 20 days EMA over past six sessions . As a result, index recorded breakout from 2 months consolidation 52600 -49800 that makes us confident to revise target upward towards 53500 in coming weeks as it is 80 % retracement of past 2 months decline (54467 -49787 ) . The upward inching ratio chart of Bank Nifty/ Nifty suggest continuation of relative outperformance going forward . Meanwhile, key support is placed at 51300 as it is 50 % retracement of current up move (49787 -52780 )

* Structurally, since July -23 , on 4 occasions Bank Nifty has maintained the rhythm of not correcting > 9 % and subsequently undergone base formation for next 3 - 4 weeks before unfolding next leg of up move . In current scenario, with ~ 8 % correction already in place, we expect Bank Nifty to maintain the same rhythm and stage bounce in coming sessions

* The PSU bank index has been undergoing a higher base formation above 100 days EMA . Going ahead, we expect PSU Bank index to resolve higher and surpass September 2024 high of 7050

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